Bankers expect credit demand to accelerate into Q3FY27 across industry, infrastructure and retail — even as deposit growth lags and loan-to-deposit ratios climb.
Commercial bankers across public and private sector institutions are forecasting a sustained acceleration in domestic credit demand across key industrial, infrastructure, and retail sectors heading into the third quarter of FY27. Following recent monetary policy adjustments and continued public sector capital expenditure initiatives, corporate credit utilisation has rebounded as private capital investments expand across manufacturing, renewable energy, and industrial logistics hubs. Retail lending portfolios — led by secured housing finance, auto loans, and micro-business credit lines — continue to demonstrate expansion across Tier-2 and Tier-3 urban markets.
However, this credit growth has introduced operational challenges for institutions with aggressive balance-sheet growth targets. Several commercial lenders are experiencing funding pressures as system-wide deposit accretion lags credit growth, resulting in heightened loan-to-deposit ratios. This structural divergence is intensifying deposit acquisition competition across commercial banks, prompting institutions to raise term-deposit rates and introduce customised corporate treasury products to secure liquidity.
Furthermore, the central bank’s liquidity management measures aimed at curbing inflationary pressures have restricted surplus market funds, requiring treasury desks to balance loan growth against statutory reserve obligations. Asset-liability committees are closely monitoring interest rate spreads and net interest margins to prevent maturity mismatches.
As banks navigate this market cycle, leadership teams are leveraging automated loan origination platforms and data-driven underwriting models to accelerate processing times while maintaining prudent credit standards.
Source: ET BFSI / Banking Finance
