New Delhi: Banks accounted for 77.1 per cent of overall incremental credit between March and July 2026, adding Rs 7.17 lakh crore to their loan books compared with Rs 2.13 lakh crore by non-banking financial companies (NBFCs), highlighting the dominant role of banks in fresh lending, according to a Bank of Baroda report released on Wednesday.
The report said banks currently hold around 3.7 times the outstanding credit of NBFCs and are expanding their lending at a significantly faster pace.
Commercial real estate emerged as the sector where banks have been most aggressive, accounting for nearly 100 per cent of incremental credit during the period. The strong lending growth comes despite the Reserve Bank of India (RBI) raising risk weights on commercial real estate exposure as part of measures to regulate credit flows.
According to the report, the trend points to strengthening construction activity and continued demand for financing in the commercial real estate segment.
Gold loans have also recorded rapid growth across both banking and NBFC channels. Bank credit against gold increased 88.1 per cent year-on-year in July 2026, compared with 68.5 per cent growth for NBFCs. Outstanding gold loans stood at Rs 5.5 lakh crore with banks and Rs 3.5 lakh crore with NBFCs.
Banks maintained a dominant position in incremental credit across most sectors, although consumer durables remained a notable exception, with banks accounting for just 6.3 per cent of fresh credit in the segment.
For vehicle loans and lending to transport operators, banks accounted for slightly more than half of incremental credit.
The report also highlighted differences in the lending portfolios of banks and NBFCs. Banks have maintained a relatively diversified credit portfolio, with retail loans, services and industry constituting the largest segments.
Retail loans accounted for 32.5 per cent of total bank credit, followed by services at 28.1 per cent and industry at 21.7 per cent.
NBFC lending, in comparison, remained more concentrated, with retail loans accounting for 43.5 per cent of their credit and industry contributing 36.9 per cent. Infrastructure forms a significant part of NBFC exposure within the industrial segment.
Banks are also regaining ground in infrastructure lending. Bank credit to the sector grew 10.2 per cent year-on-year, compared with 6.2 per cent growth for NBFCs.
More significantly, banks accounted for 99.6 per cent of incremental infrastructure credit between March and July 2026, indicating a strong revival in bank participation in a segment where NBFCs had previously maintained a stronger presence.
Bank lending to the services sector also grew at a faster pace, rising 22.9 per cent year-on-year compared with 15.2 per cent for NBFCs. Banks had an outstanding services credit portfolio of Rs 40.7 lakh crore, substantially higher than the Rs 7.7 lakh crore held by NBFCs.
The report indicates that banks are strengthening their position across key credit segments, particularly infrastructure, services and commercial real estate, while NBFC lending remains comparatively concentrated in retail and infrastructure-linked areas.
–IANS