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Fitch on RBI Rate Cut: Loan Growth 12-13% in FY26

24 June 20251 min read
BANKING & FINANCEFitch on RBI RateCut: Loan Growth12-13% in FY2624 June 2025safalsetu.com

Why in the news

Fitch Ratings said RBI’s recent 50 bps rate cut could revive lending in FY26, but only if deposits keep pace.

FY25 metrics

MetricPosition
Loan-to-deposit ratioUp 120 bps
Sector loan growth10%, 4-year low, as NBFC lending slowed
PSB loan growth12.4%, ahead of private banks
Net interest marginDown 20 bps

Earnings support

  • Lower credit costs, recoveries from NPAs and treasury gains.

Exam angle

  • Agency: Fitch; forecast: 12-13% in FY26.
  • Terms: LDR, NIM, deposit mobilisation.

Test yourself

1. What FY26 loan growth range did Fitch Ratings project after the RBI's 50 basis point rate cut?

Fitch expected 12-13% loan growth, subject to deposits.

2. What did Fitch say is needed for the revival of loan growth to be sustained?

Growth is contingent on stronger deposit mobilisation.

3. By how much did banks' net interest margin fall in FY25 according to Fitch?

NIM fell 20 basis points.

This topic is part of Daily Current Affairs 24 June 2025 (13 topics).

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