SBI Expects Loan Growth to Slow Down to 12–13% in FY26

Manoj, a small shop owner, took a loan of ₹5,00,000 from SBI in 2024 to grow his business. By 2025, his loan increased to ₹5,75,000 (15% growth) as he expanded his shop. But in 2026, he noticed something different – his loan only grew to ₹6,44,000 (12% growth), much slower than before.

Confused, Manoj asked his bank manager why the growth was slower. The manager explained that banks were being more careful due to global economic problems and new rules. Manoj realised he would have to plan his expenses better now that loans were not growing as fast. 

Why is this happening? What does it mean for people like Manoj? We will read this in the blog.

1. Lowered Growth Rate

The State Bank of India (SBI) expects its loan growth to slow down to 12-13% in the financial year 2026. This is a decrease from the previous year's growth of 14-15%. The slowdown is due to global economic uncertainties and tighter lending rules.

To understand this better, let's look at an example of a boy named Raghu.

Raghu's Loan Growth

In 2024, Raghu took a loan of ₹1,00,000. In 2025, his loan increased by 14% to ₹1,14,000. In 2026, the growth slowed to 11.4%, making his loan ₹1,27,000.

SBI's Loan Growth

SBI's loan growth mirrors Raghu's example, showing a decrease from 14-15% in 2024 to 12-13% in 2025. This indicates a cautious approach due to economic factors.

In summary, both Raghu and SBI are experiencing slower loan growth, reflecting the broader economic environment.

2. Global Uncertainty

The State Bank of India (SBI) expects its loan growth to slow down to 12-13% in the financial year 2026. This is lower than the previous year's growth. And another reason for this slowdown is global uncertainty.

Global uncertainty means that things are not stable around the world. There may be problems like wars, inflation, or changes in big economies. When such things happen, people and businesses become careful. They may not take new loans because they are unsure about the future. This affects banks like SBI, as fewer people are borrowing money.

Let us understand this with an example of a boy named Sanam.

In this table, we see that Sanam borrowed less money each year. This is similar to what SBI is experiencing. When people like Sanam borrow less, the bank's loan growth slows down.

3. Impact on Corporate Loans

State Bank of India (SBI) expects its loan growth to slow down to 12–13% in the financial year 2026. This is a decrease from the 14–16% growth seen in earlier years. The slowdown is due to factors like slower deposit growth and a cautious approach to lending.

Corporate loans, which are loans given to businesses, will also be affected. Companies may find it harder to get large loans quickly. SBI is focusing on lending to sectors like agriculture and small businesses, which may mean less money available for big companies.

To understand this better, let's look at an example of a boy named Manish:

In 2024, Manish took a loan of ₹10,00,000. With a 14% growth rate, his loan increased to ₹11,40,000 in 2025. In 2026, with the growth rate slowing to 12%, his loan increased to ₹12,76,800.

This example shows that with a slower loan growth rate, the amount of money available for loans increases at a slower pace. Businesses like Manish's may need to plan carefully for their funding needs.

SBI's cautious approach aims to ensure healthy growth and manage risks effectively.

4. Overall Credit Growth

In the financial year 2025, India's overall credit growth is expected to slow down to around 12–13%. This is less than the 16.5% growth seen in early December 2023. The slowdown is due to tighter lending rules, slower deposit growth, and cautious lending by banks.

In 2023, Lakshit took a loan of ₹5,00,000. With a 16.5% growth rate, his loan increased to ₹5,82,500 in 2024. In 2025, with the growth rate slowing to 12%, his loan increased to ₹6,52,425.

This example shows that with a slower credit growth rate, the amount of money available for loans increases at a slower pace. Individuals like Lakshit may need to plan carefully for their funding needs.

Banks are being cautious to ensure healthy growth and manage risks effectively.

Conclusion

SBI expects slower loan growth in 2026 due to global uncertainty and tighter rules. People and businesses are borrowing less, like Raghu and Sanam. Corporate loans may also grow slowly, affecting companies like Manish’s. Overall, India’s credit growth is slowing, as seen with Lakshit’s loan. Banks are being careful to manage risks. This means loans will increase at a slower rate, so planning is important.

FAQs

1. Why is SBI's loan growth slowing down?

Due to global uncertainty and tighter lending rules.

2. How does this affect businesses?

Companies may find it harder to get big loans quickly.

3. What should borrowers do now?

Plan carefully, as loans may grow at a slower rate.

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LoansJagat Team

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