India’s bank credit growth strengthened in November 2025, supported by improved lending to micro, small and medium enterprises (MSMEs), a pickup in vehicle loans and a recovery in credit to non-banking financial companies (NBFCs), even as retail and parts of the services sector showed signs of moderation, according to a CareEdge report dated January 7.

Non-food bank credit expanded by 11.4% year-on-year in November, up from 11.1% in October 2025 and 10.6% in November 2024, signalling a clear sequential improvement in credit offtake. Gross bank credit also recorded stronger growth, reflecting a gradual recovery in lending momentum despite lingering caution in certain segments. The data include the impact of the merger of a non-bank with a bank from July 2023 onwards.

At a sectoral level, industrial credit growth showed a notable improvement. Lending to industry rose by 9.6% year on year in November, compared with 8.3% in the same month last year. This acceleration was primarily driven by robust credit demand from MSMEs, which continued to record double-digit growth and outpace lending to large corporates. As a result, the share of large industries in total industrial credit declined to around 68% in November 2025 from over 71% a year earlier, underscoring a structural shift in bank lending towards smaller enterprises.

Within the industry, credit growth was broad-based across several capital expenditure–linked sectors. Stronger lending was recorded in mining and quarrying, beverages and tobacco, textiles, leather and leather products, petroleum and coal products, engineering goods, automotive components and transport equipment, cement and cement products, infrastructure, and gems and jewellery. These trends point to improving investment activity in select segments of the economy. However, the overall momentum was tempered by slower or weaker credit growth in food processing, wood and wood products, paper and paper products, rubber and plastics, nuclear fuels, chemicals, glassware, basic metals and construction, highlighting a mixed industrial credit landscape.

Infrastructure credit, which accounts for roughly one-third of total industrial lending, grew by 4.3% year-on-year in November. The power sector emerged as the key driver, with credit growth accelerating sharply to 14.6% from 3.2% a year earlier. Power now accounts for nearly 54% of infrastructure credit. Ports also recorded strong growth of 25.6%, reflecting increased investment activity. In contrast, credit to the road sector contracted by 2.7% year-on-year, compared with growth of 7.2% in the previous year, while railways and telecommunications also saw declines.

Credit to the services sector rose by 11.7% year-on-year in November, marginally lower than the 12.8% growth recorded a year earlier. Lending was supported by wholesale trade, tourism, hotels and restaurants, shipping, and NBFCs, benefiting from steady consumer demand and improved mobility. However, this was partly offset by weaker growth or contraction in retail trade, transport operators, aviation, professional services and other services.

NBFCs continued to retain a significant share of bank credit. Outstanding bank credit to NBFCs increased by 9.5% year-on-year, up from 7.5% a year earlier. This marks a gradual normalisation after several quarters of muted growth, when regulatory tightening and an unfavourable base had constrained lending to the sector. Trade credit also remained a steady contributor, with outstanding loans growing 14.2% year-on-year, only slightly below the pace seen a year earlier.

Personal loans, which account for close to one-third of total bank credit, grew by 12.8% year-on-year in November, easing from 13.4% in November 2024. The segment continued to dominate overall credit expansion, but underlying trends pointed to moderation across several retail categories. Housing loan growth slowed to 9.9% year on year from 12.2% a year earlier, while vehicle loan growth strengthened to 12.4% from 10.3%, supported by strong retail demand and the rollout of GST 2.0 reforms, particularly in passenger vehicles, two-wheelers and three-wheelers.

Credit card lending saw a sharp slowdown, with growth decelerating to 2.4% year-on-year from 18.1% a year earlier, reflecting slower new card issuance and more cautious consumer spending. Other unsecured personal loans grew 8.6% year-on-year, down from 13.1% last year, amid stress in certain borrower segments and tighter lending standards.

A standout feature of the retail credit data was the surge in loans against gold jewellery, which jumped by 125.3% year on year in November, far higher than the 77.3% growth recorded a year earlier. This sharp rise was driven by the reclassification of around 20% of agri-gold loans as retail loans following higher eligibility limits, as well as a steep increase in gold prices, which rose more than 64% year on year. Excluding gold-backed loans, overall personal loan growth moderated to around 9.6%, indicating softer underlying retail momentum.

Agricultural and allied sector credit, after adjusting for the reclassification of agri-gold loans, grew an estimated 11.4% year on year in November, compared with 15.3% a year earlier. The adjusted figure was significantly higher than the initially reported 8.7%, pointing to continued resilience in farm-sector lending.

Overall, the CareEdge report indicates that India’s credit cycle is showing signs of a gradual and uneven recovery. Lending to MSMEs, vehicle financing and NBFCs is underpinning growth, while demand from large corporates remains relatively subdued. Looking ahead, the power generation sector, particularly renewable energy, is expected to drive a stronger capital expenditure cycle in FY26, supporting medium-term credit growth. At the same time, banks appear to be balancing the push for higher lending with the need to protect asset quality and margins as credit conditions evolve.