According to the RBI statement, credit growth at PSBs has been consistently higher than that of private sector banks (PVBs) over the past five quarters. Photo credit: ROY CHOWDHURY A
Credit growth at PSBs has been consistently higher than that of private sector banks (PVBs) over the past five quarters, according to the RBI’s statement on Quarterly Basic Statistical Return (BSR) of Scheduled Commercial Banks (SCBs).
Bank credit growth (on an annual basis) improved marginally from 11.8 percent in December 2024 to 12.2 percent in December 2025.
Following the relaxation of policy rates, the share of planned loans from commercial banks (SCBs) with interest rates below 9 percent increased from 42.2 percent in December 2024 to 62.4 percent in December 2025, reflecting a shift in the interest rate distribution of bank credits.
The weighted average interest rate on outstanding loans continued to decline across key sectors since December 2024, reaching 9.35 percent in December 2025 (10.19 percent in December 2024), with WALR on personal loans softening the most, followed by industrials.
rural, urban centers
RBI said bank branches in rural, semi-urban and urban centers showed higher credit growth than metropolitan branches, with their combined share in total lending at 40.4 percent in December 2025, up from 36.9 percent in December 2020. Since December 2024, credit growth in metropolitan branches has remained lower than branches in other demographics.
The central bank noted that credit growth accelerated in the agricultural, industrial and trade sectors in December 2025 compared to December 2024. In contrast, transportation, personal lending and professional services sectors showed moderation in credit growth during the same period.
Personal loan growth slowed from 13.7 percent in December 2024 to 12.1 percent in December 2025, coinciding with overall bank credit growth, after a sustained period of superlative growth.
Lending to private businesses improved from 9.0 percent in September 2025 and 7.9 percent in June 2025 to 9.6 percent (yoy) in December 2025.
Published on February 27, 2026
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