The credit growth of Scheduled Commercial Banks (SCBs) has moderated to 9.6 per cent as on 13 June 2025, a sharp decline from 19.1 per cent recorded a year ago, according to a recent report by the State Bank of India (SBI).
The slowdown is attributed to weaker momentum and unfavourable base effects. The report stated that, excluding the merger impact of HDFC with HDFC Bank (effective from 13 July 2023), the adjusted credit growth stands at 10.6 per cent as on 13 June 2025, compared to 15.5 per cent a year ago.
It stated "SCBs credit growth moderated to 9.6 per cent, as on 13 June 2025 (19.1 per cent a year ago;) As per SBI's analysis, the total credit increased by ₹70,005 crore (0.4 per cent YTD) till 13 June 2025. This is significantly lower as compared to the credit growth of ₹2.74 lakh crore (1.7 per cent YTD) during the same period last year.
After three consecutive years of robust credit growth between FY21 and FY24, credit momentum began to slow from June 2024, eventually settling at 11.1 per cent in FY25.
The report also highlighted that bank-group-wise data showed a key shift; the private banks saw a sharp slowdown, while public sector banks (PSBs) maintained relatively stable growth.
SBI report said "The bank-group wise contribution to SCB growth indicates that private banks' growth slowed down significantly compared to PSBs".
PSBs recorded a credit growth of 12.2 per cent in FY25, compared to 13.6 per cent in FY24.
In contrast, credit growth of private sector banks declined to 9.5 per cent in FY25, marking the lowest level since FY21.The report also pointed out changes in the sectoral composition of credit growth.
The share of the industry sector in incremental credit rose to 17 per cent in FY25 from 11 per cent in FY24. A major positive trend came from the MSME sector, which saw a 17.8 per cent year-on-year increase in credit.
The improvement is driven by better balance sheet quality and reduced delinquencies.
SBI credit to MSMEs showed a strong growth because of multiple factors, including. formalization through UDYAM registration number seeding, enhanced guarantee cover provided under government schemes, changes in the definition of MSMEs, and a reduction in turnover thresholds for mandatory onboarding on the TReDS platform.
Overall, the SBI report highlighted a visible shift in credit trends, with public sector banks gaining ground and the MSME sector emerging as a key driver for credit growth in FY25.