Credit Growth Accelerates Across Key Sectors in FY 2025-26; MSME and Retail Loans Register Robust Growth of 19.6% and 19.8% respectively

The financial health of Public Sector Banks (PSBs) have shown significant improvement with healthy balance sheets, historically high profits and multi-decadal low level of gross non-performing assets (GNPAs).

The financial performance metrics and Non-Performing Asset reductions of PSBs for last five years is given below:

(₹ in lakh Crores)

Financial Parameters	31.3.2022	31.3.2023	31.3.2024	31.3.2025	31.3.2026
Total Business	181.5	203.2	226.7	251.7	283.3
Total Deposits	107.2	117.1	129.0	142.0	156.3
Total Loans & Advances	74.3	86.1	97.7	109.8	127.0
Net Profit	0.67	1.05	1.41	1.78	1.98
Gross NPAs (%)	7.3	5.0	3.5	2.6	1.9
Capital Adequacy - CRAR (%)	14.6	15.5	15.6	16.1	16.6

#Source: Reserve Bank of India

Further, PSBs have recorded sustained credit growth across different sectors of the economy. The sector-wise credit growth recorded by PSBs in the retail, agriculture, MSME, and infrastructure segments is given below:

(Growth Y-o-Y in %)

Credit growth	31.3.2022	31.3.2023	31.3.2024	31.3.2025	31.3.2026
Retail Loans	12.9	20.2	12.6	17.7	19.8
Agriculture and Allied Activities Loans	6.7	18.8	16.9	9.8	16.2
MSME Loans	-1.7	9.0	11.0	9.8	19.6
Infrastructure Loans*	-14.7	33.7	5.9	2.2	4.9

#Source: Reserve Bank of India.

*Pertaining to Industries Sector Only

The Government has introduced Emergency Credit Line Guarantee Scheme (ECLGS 5.0) in May, 2026, to tide over any short-term liquidity mismatches faced by businesses due to West Asia Crisis. The scheme provides guarantee coverage to Member Lending Institutions (MLIs) through National Credit Guarantee Trustee Company Limited (NCGTC) for the amount in default under the additional credit facility extended to the eligible borrowers. The scheme provides 100% guarantee coverage for MSMEs and 90% guarantee coverage for non-MSMEs and the scheduled passenger airline sector, up to a credit flow of ₹2,55,000 crore, which includes ₹5,000 crore specifically earmarked for the scheduled passenger airline sector.

Under ECLGS 5.0, borrowers in the airline sector are eligible for assistance of up to 100% of their total peak credit outstanding (both fund-based and non-fund-based) during the fourth quarter of FY 2025–26, i.e., from 1.1.2026 to 31.3.2026 (both dates inclusive). The maximum loan amount available under ECLGS 5.0 for the airline sector is ₹1,500 crore per borrower (of this, any amount beyond ₹1,000 crore and Up to ₹1,500 crore shall be permitted only with a proportionate equity contribution from the promoters/owners).

This information was given by the Minister of State in the Ministry of Finance Shri Pankaj Chaudhary in a written reply to a question in Rajya Sabha today.

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Emergency credit guarantee support addresses business liquidity mismatches while public sector banks report stronger asset quality and sectoral lending growth. Public sector banks reported improved balance-sheet health, rising business and lending, higher profits, stronger capital adequacy, and lower gross non-performing assets through FY 2025-26. Credit expanded across retail, agriculture, MSME, and infrastructure segments. Emergency Credit Line Guarantee Scheme 5.0 provides guarantee coverage to member lending institutions for eligible additional credit facilities addressing short-term liquidity mismatches, with full coverage for MSMEs and differentiated coverage for non-MSMEs and scheduled passenger airlines. Airline assistance is linked to peak credit outstanding and may require proportionate promoter or owner equity contribution above the applicable threshold.