India’s banking sector ended FY26 on a robust note, with systemic credit growth accelerating to 16.1% year-on-year as of March-end. The final fortnight of the fiscal saw a sharp pickup, with incremental credit addition of nearly INR6 trillion. The system-level loan-to-deposit ratio (LDR) declined to 81.4% from 83% in the prior fortnight, while incremental LDR dropped to 81% from 101%.
Banks increasingly relied on wholesale funding, with Certificate of Deposit (CD) issuances rising to INR14.3 trillion in FY26. AU Small Finance Bank is pursuing a universal banking licence, which would expand its liability franchise and reduce the cost of funds. ICICI Bank continues to deliver a well-rounded performance, with a loan book projected to grow at ~16% CAGR over FY26–28.
Overall, analysts recommend AU Small Finance Bank and ICICI Bank for their robust strategies and growth potential.
