India Inc. is showing renewed vigor, fueling a surge in loan demand and setting the stage for robust economic activity. This resurgence is marked by increased capital expenditure across diverse sectors and a greater need for working capital, signaling a positive turn in the corporate credit cycle.
The numbers tell a compelling story. Overall bank credit has surged, crossing ₹200 lakh crore for the first time to reach ₹203.2 lakh crore by the end of December 2025, according to RBI data. Year-to-date credit expansion reached ₹20.78 lakh crore, a significant jump compared to the ₹13.18 lakh crore increase during the same period the previous year. This robust growth is reflected in the latest figures, with loans in India increasing by 13.10 percent in January 2026 compared to the same month last year.
Several factors are contributing to this upswing. A revival in capital expenditure (capex) is a primary driver, with companies across sectors like oil and gas, infrastructure, metals, and power seeking funds for expansion and new projects. In addition, large non-bank financial companies (NBFCs) are also contributing to the increased demand for credit. This renewed investment appetite is a clear indication of stronger overall economic activity, enabling businesses to scale up operations and pursue growth opportunities. The Union Budget 2026-27's emphasis on infrastructure development, with a proposed ₹12.2 lakh crore in public capital expenditure, is expected to further boost project financing and encourage private investment.
Major financial institutions are reporting accelerated lending momentum, further confirming the trend. State Bank of India (SBI), the country's largest lender, has raised its FY26 loan growth guidance to 13-15%, citing trade deals and announcements in the recent Union Budget as key drivers. SBI's corporate loan book witnessed a 13.4% growth in the December quarter, a significant increase from the 7.1% growth in the previous quarter. The bank's total loans stood at ₹46.8 trillion as of December 31, with a strong corporate loan pipeline of ₹7.9 trillion. Public sector banks (PSBs) are also expected to see strong credit growth, with overall credit growth currently at around 12 percent.
The rise in loan demand is not limited to specific sectors. Unsecured loans and overall credit demand have skyrocketed, indicating a broad-based need for financing across various segments. While consumer lending growth is expected to moderate slightly in 2025, the overall trend remains positive, supported by a growing middle class, rising disposable incomes, and accommodative monetary policies.
However, the rapid increase in loan demand is also presenting challenges. Lenders are seeking relaxation of certain liquidity rules from the RBI to unlock more funds for growth, as demand for loans is outpacing deposit growth. This underscores the need for banks to maintain a balance between meeting credit demand and ensuring sufficient liquidity and capital adequacy.
Looking ahead, the India Bank Loan Growth is projected to trend around 16.50 percent in 2027 and 17.50 percent in 2028. This optimistic outlook is supported by long-term megatrends such as digital transformation, infrastructure development, and the government's focus on self-reliance. As India Inc. continues to adapt to a new economic reality, characterized by digital systems, sustainable practices, and regulatory readiness, the demand for loans is expected to remain strong, driving economic growth and development.