Mumbai, April 8 || Measures taken by the Reserve Bank of India (RBI) to ease the monetary policy in recent months are expected to support a year-on-year credit expansion of around 10.8 per cent at Rs 19 lakh crore to Rs 20.5 lakh crore in 2025-2026, according to an ICRA report released on Tuesday.
Such measures include the repo rate cut, deferment of proposed changes in the liquidity coverage ratio (LCR) framework and additional provisions on infra projects, along with the roll-back of increased risk weights on lending to unsecured consumer credit and non-banking financial companies (NBFCs).
Besides this, the durable liquidity infusion by the RBI through open market operations (OMO) by way of purchases of Government bonds and forex swaps with banks, would aid the liquidity and faster transmission of the ongoing cut in policy rates, the report states.
However, the persisting challenges in deposit mobilisation, high credit-deposit (CD) ratio and rising stress in the unsecured retail and small business loans would remain a drag on credit growth, and accordingly, the pace of credit expansion is expected to trail the recent highs seen in FY2024, the report further states.
"The pro-growth regulatory stance has revived the lenders’ appetite for credit growth in Q4 FY2025 after a brief period of slow incremental credit growth in the initial period of FY2025," it said.