Mumbai | Kolkata: Indian banks expect corporate loans to expand in double digits this fiscal, led by demand from diverse sectors such as renewable energy, infrastructure, auto manufacturing and data centres.
Several large lenders, such as State Bank of India (SBI), Bank of Baroda (BoB) and Canara Bank, have a strong corporate pipeline that they expect would fructify into concrete advances this fiscal.
SBI, India's largest corporate lender, expects credit growth in this segment at 13% to 15% in FY27 on the back of a ₹5.5 lakh crore corporate loan pipeline, chairman CS Setty told reporters post-earnings.
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"We are seeing demand from sectors like infrastructure, renewables, thermal power, auto manufacturing, refinery and fertilizers... demand is coming not only from public sector companies but also large private sector groups," Setty said.
SBI's corporate loan book increased 15% year on year to ₹14.24 lakh crore in the quarter ended March 2026, led by loan demand from sectors such as petroleum and petrochemicals (up 29%) and engineering (up 35%). Infrastructure and services are the top two sectors in SBI's corporate loan book, with 10% and 15% shares, respectively, of total loans.
BoB, India's second largest public sector bank by assets, has seen a 11% corporate loan growth in fiscal ended March 2026 led by a 14% growth from private sector companies and a 24% growth from the mid-corporate segment.
CEO Debadatta Chand said he expects 10% corporate loan growth led by private sector corporate and mid-corporate demand.
"This is what we actually established this year and going to be for the next year. We have a ₹50,000 crore pipeline as of today. Out of that, we have already sanctioned ₹25,000 crore, but we have not disbursed. Another ₹25,000 crore worth of proposals is under process. A couple of sectors have contributed slightly more like renewable sector, data centre, even commercial real estate where the demand is slightly stronger," Chand told ET in an interview.
But strong loan growth means PSU banks are running down liquidity coverage ratio (LCR) to fund the credit growth.
Sustainable?
In a report Tuesday, Macquarie Capital Securities said current levels of LCR now no longer offer much room to grow loans without deposits and that is where the challenge is for PSU banks.
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"PSU banks' recent market-share gains appear driven more by balance-sheet liquidity than by superior deposit franchises. Without a structural improvement in deposit growth-currently only 9-14% for most PSU banks-PSU banks will struggle to keep gaining share at the expense of private banks once liquidity buffers tighten and funding becomes the binding constraint again," Macquarie said.
Private sector Axis Bank also recorded a strong growth in its corporate book last year, growing the portfolio 38% year-on-year to ₹4.13 lakh crore at the end of March. Axis Bank, India's third largest private sector bank by assets also reported a 38% growth in corporate loans year on year led by a 33% growth in the mid corporate segment.
The bank did not give its credit growth estimate for the year but said it expects to grow 3 percentage points faster than the banking system in a three to five year horizon.
Several large lenders, such as State Bank of India (SBI), Bank of Baroda (BoB) and Canara Bank, have a strong corporate pipeline that they expect would fructify into concrete advances this fiscal.
SBI, India's largest corporate lender, expects credit growth in this segment at 13% to 15% in FY27 on the back of a ₹5.5 lakh crore corporate loan pipeline, chairman CS Setty told reporters post-earnings.
Also Read: As India grows richer, banks will have to adjust to thinner margins: Indian Bank CEO
"We are seeing demand from sectors like infrastructure, renewables, thermal power, auto manufacturing, refinery and fertilizers... demand is coming not only from public sector companies but also large private sector groups," Setty said.
SBI's corporate loan book increased 15% year on year to ₹14.24 lakh crore in the quarter ended March 2026, led by loan demand from sectors such as petroleum and petrochemicals (up 29%) and engineering (up 35%). Infrastructure and services are the top two sectors in SBI's corporate loan book, with 10% and 15% shares, respectively, of total loans.
BoB, India's second largest public sector bank by assets, has seen a 11% corporate loan growth in fiscal ended March 2026 led by a 14% growth from private sector companies and a 24% growth from the mid-corporate segment.
CEO Debadatta Chand said he expects 10% corporate loan growth led by private sector corporate and mid-corporate demand.
"This is what we actually established this year and going to be for the next year. We have a ₹50,000 crore pipeline as of today. Out of that, we have already sanctioned ₹25,000 crore, but we have not disbursed. Another ₹25,000 crore worth of proposals is under process. A couple of sectors have contributed slightly more like renewable sector, data centre, even commercial real estate where the demand is slightly stronger," Chand told ET in an interview.
But strong loan growth means PSU banks are running down liquidity coverage ratio (LCR) to fund the credit growth.
Sustainable?
In a report Tuesday, Macquarie Capital Securities said current levels of LCR now no longer offer much room to grow loans without deposits and that is where the challenge is for PSU banks.
Also Read: Indian private banks not at war with bad loans, the troubled turf is inside their homes
"PSU banks' recent market-share gains appear driven more by balance-sheet liquidity than by superior deposit franchises. Without a structural improvement in deposit growth-currently only 9-14% for most PSU banks-PSU banks will struggle to keep gaining share at the expense of private banks once liquidity buffers tighten and funding becomes the binding constraint again," Macquarie said.
Private sector Axis Bank also recorded a strong growth in its corporate book last year, growing the portfolio 38% year-on-year to ₹4.13 lakh crore at the end of March. Axis Bank, India's third largest private sector bank by assets also reported a 38% growth in corporate loans year on year led by a 33% growth in the mid corporate segment.
The bank did not give its credit growth estimate for the year but said it expects to grow 3 percentage points faster than the banking system in a three to five year horizon.
