Reserve Bank of India | Image: Republic Business
The Reserve Bank of India (RBI) has unveiled the findings from its 33rd quarterly Bank Lending Survey (BLS), which assesses the credit demand and lending conditions among scheduled commercial banks.
This survey, which focuses on the second quarter of the fiscal year 2025-26, indicates a sustained optimism among bankers regarding the increasing demand for loans across major sectors of the economy.
Conducted for the second quarter of FY26, the survey evaluates the current loan assessments while also projecting expectations for the upcoming quarters, namely Q3 and Q4 of FY26, and Q1 of FY27.
The results highlight that bankers have noted an uptick in loan demand during the second quarter, particularly in essential sectors such as agriculture, manufacturing, infrastructure, and services.
The survey revealed, “Bankers maintain a positive outlook on overall loan demand for Q3:2025-26, largely driven by anticipated increases in borrowing from agriculture, mining and quarrying, manufacturing, infrastructure, and services sectors.”
The net response concerning overall loan demand registered at 38.9 percent in Q2FY26, a slight increase from 37.5 percent observed in the previous quarter.
Specifically, demand for agricultural loans surged to 39.7 percent, while the manufacturing sector’s demand rose to 37.5 percent. The services sector demonstrated robust enthusiasm with a response of 35.2 percent, alongside retail or personal loan demand also at 37.5 percent.
Looking ahead, bankers express confidence in the credit landscape. The survey forecasts further increases in loan demand across all sectors for the third quarter of FY26, with overall expectations climbing to 42.6 percent.
Key sectors anticipated to be the main contributors to this growth include agriculture (44.8 percent), manufacturing (44.6 percent), and infrastructure (34.5 percent). This optimism is expected to extend into Q4 FY26 and Q1 FY27, with bankers projecting a consistent demand across various sectors.
The survey recorded net responses of 44.6 percent for both subsequent quarters, indicating a strong sentiment towards credit growth.
Alongside the rising loan demand, the survey findings suggest that most bankers anticipate lending conditions to remain favorable. In Q2FY26, the majority of respondents reported no alterations in loan terms, with a positive net response of 9.3 percent reflecting a slight relaxation in conditions.
Looking forward, lenders foresee further easing of lending terms, with the net response projected to rise to 18.5 percent in Q3 FY26. The agriculture, manufacturing, services, and retail sectors are expected to gain from these favorable conditions.
For the extended outlook, it is anticipated that lenient lending conditions will continue, with net responses of 20.4 percent for Q4 FY26 and 24.1 percent for Q1 FY27. The 33rd iteration of the BLS encompassed 30 significant scheduled commercial banks, accounting for over 90 percent of total credit in India.
