Will Bank Loans Become Easier ? KBW CEO Explains the Credit Normalisation Phase

Banks are slowly opening up, but lending still comes with caution, here’s what’s really happening behind the scenes

People keep asking if getting a bank loan in 2025 will be any easier. The short answer, maybe a little. The Federal Reserve’s Senior Loan Officer Opinion Survey (July 2025) said around 4.8% of banks still tightened business loan rules, while about 21% saw fewer loan requests. Feels like a slow return, not a rush.

Banks everywhere are still cautious. Interest rates remain high, and demand hasn’t bounced back yet. But some early signs of life can be seen.

According to the Federal Reserve Board’s Senior Loan Officer Opinion Survey (SLOOS) published in July, banks on balance tightened standards and saw weaker demand for many business loan categories in Q2.

Why Are Banks Still Careful About Lending?

The credit normalisation phase explained by Tom Michaud, the CEO of Keefe, Bruyette & Woods (KBW), means banks are slowly getting back to regular lending. In an interview on Bloomberg, October 2025, he said lenders are now focusing on balance, not speed.

The S&P Global Market Intelligence report (August 2025) shows loan growth could reach 4.1% in 2025. In 2024 it was about 2.6%. So, there’s progress, but it’s slow and steady.
 

These numbers tell their own story. Banks are lending again, but carefully. Borrowers with better records might feel the ease first. That’s how it goes.

What Does “Credit Normalisation” Really Mean?

Credit normalisation simply means the banking system is settling after a few rough years. Between 2022 and 2024, lenders raised the bar due to inflation and rising interest rates. 2025 looks calmer. Banks are testing how much they can lend without repeating old mistakes.
 

This shift gives borrowers some hope. Those with clean credit, regular income, or collateral may see approvals come faster. It’s not easy yet, but easier than 2024.

What Are Regulators and Governments Doing to Support Lending?

In March 2024, this publication covered Lending Rules Stiffen Amid Inflation Fears. That time, banks were freezing limits and pulling back credit. The current situation feels like part two of that story, only softer.

Even digital lenders like LoansJagat have noticed movement. We reported around a 6% jump in loan applications between January and August 2025. People are trying again, and banks seem more open now. Maybe it’s trust returning bit by bit.

Conclusion

The RBI Financial Stability Report (June 2025) shows credit offtake by public sector banks in India rising by 9.4% in the April–June quarter, compared with 8.7% a year before. The Federal Reserve confirmed balance sheets are improving in its July report.

So both regulators and banks seem aligned, careful but confident. The government wants digital channels to make loan processing faster and cleaner. That’s where things are changing the most.