HDFC Bank saw 7 per cent y-o-y growth in advances in Q1FY26 at ₹26.53 lakh crore
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A majority of private banks reported faster pace of deposit growth than credit growth in Q1FY26, while most large public sector banks (PSBs) saw credit growth outpacing deposits in the reporting quarter, according to provisional Q1FY25 data shared by lenders.
Country’s largest private lender HDFC Bank saw 7 per cent year-on-year (y-o-y) growth in advances in Q1FY26 at ₹26.53 lakh crore, whereas deposits rose 16 per cent y-o-y to ₹27.64 lakh crore. The bank reported slower pace of credit growth in Q1 despite its management saying that the lender’s advances will grow on-par with industry in the current fiscal. HDFC Bank also securitised loans amounting to ₹3,300 crore during the reporting quarter to help reduce its credit-deposit (CD) ratio.
Deposit growth, in fact, outpaced credit growth across multiple mid-sized banks including Bandhan Bank, RBL Bank, AU Small Finance Bank (SFB) and Ujjivan SFB.
Higher credit growth
Public sector banks (PSBs), meanwhile, posted higher credit growth in the reporting quarter aided by decent CD ratio and excess statutory liquidity ratio (SLR). Bank of Baroda (BoB) reported 13 per cent y-o-y rise in advances at ₹12.07 lakh crore in Q1 and its deposits were up 9 per cent at ₹14.35 lakh crore. Bank of India (BoI) and Bank of Maharashtra reported similar trends.
Sanjay Agarwal, senior director at CAREEdge Ratings, said private banks have not been aggressively lending in Q1 to protect margins, following the central bank’s recent repo rate cuts.
“Protection of net interest margin (NIM) post repo rate cut is currently more important than business growth for private banks. Banks are also very cautious on micro loan business. PSBs, meanwhile, with decent CD ratio and excess SLR, are being able to register higher credit growth,” he said.
“Our initial forecast for lenders’ credit growth in FY26 was at 13 per cent. However, considering the muted Q1 growth numbers, we may revise (downwards) the full year forecast on advances growth,” he added.
Published on July 4, 2025