New Delhi, Jun 30 (KNN) Credit growth among Scheduled Commercial Banks has decelerated significantly to 9.6 percent as of June 13, 2025, representing a substantial decline from the 19.1 percent growth recorded during the same period last year, according to a recent analysis by the State Bank of India.

The Micro, Small and Medium Enterprises sector emerged as a notable bright spot, registering a 17.8 percent year-over-year increase in credit uptake. This improvement has been driven by enhanced balance sheet quality and reduced delinquency rates across the sector.

Several factors have contributed to the strong performance of MSME credit growth, including formalization initiatives through UDYAM registration number integration, expanded guarantee coverage under government schemes, revised definitions of MSME categories, and reduced turnover thresholds for mandatory participation on the Trade Receivables Discounting System platform.

The moderation in credit expansion has been attributed to weakening momentum and adverse base effects that have impacted year-over-year comparisons. 

SBI’s analysis revealed that total credit increased by Rs 70,005 crore, representing a modest 0.4 percent year-to-date growth through June 13, 2025. 

This figure marks a significant decrease compared to the credit expansion of Rs 2.74 lakh crore, or 1.7 percent year-to-date, during the corresponding period in the previous year.

The banking sector had experienced three consecutive years of robust credit growth between fiscal years 2021 and 2024. However, credit momentum began showing signs of deceleration from June 2024, ultimately stabilizing at 11.1 percent in fiscal year 2025.

Bank-group analysis has revealed notable shifts in growth patterns between different categories of financial institutions. Private sector banks experienced a pronounced slowdown in credit growth, while public sector banks demonstrated relatively stable performance during the same period.

Public sector banks recorded credit growth of 12.2 percent in fiscal year 2025, representing a moderate decline from the 13.6 percent growth achieved in fiscal year 2024. In contrast, private sector banks saw their credit growth fall to 9.5 percent in fiscal year 2025, marking the lowest level recorded since fiscal year 2021.

The sectoral composition of credit distribution has also undergone significant changes during this period. The industrial sector’s share of incremental credit increased to 17 percent in fiscal year 2025, up from 11 percent in the previous fiscal year.

The SBI report highlighted a fundamental shift in credit distribution patterns, with public sector banks gaining market share while the MSME sector has established itself as a primary driver of credit growth in fiscal year 2025.

(KNN Bureau)