Share of bank credit in total resources flow rises to 65%

MUMBAI: Bank lending is back in favour. In FY26 it reclaimed primacy in financing India’s commercial sector, its share of total resource flows climbing to a three-year high, as per RBI’s April bulletin.

The shift is stark. Total resource flows reached Rs 44.7 lakh crore in FY26, while nonfood bank credit surged to Rs 29.2 lakh crore, lifting its share to 65.4%. A year earlier the system looked more balanced. Now it leans decisively towards banks.

Market instruments tell a subtler story. Equity issuance lost ground, its share slipping from 10.8% in FY25 to 7.7% in FY26. Bonds moved the other way, rising from 5.6% to 6.8%, suggesting firms preferred longer-term debt even as they returned to banks.

The past three years show how quickly the mix can change. In FY24, total flows were Rs 35.6 lakh crore and bank credit was about Rs 23 lakh crore, a share of 64.5%. In FY25, flows were similar at Rs 35.2 lakh crore, but bank credit fell to Rs 18.1 lakh crore, dragging its share down to 51.4%. FY26 reversed that dip, with the share jumping by around 14 percentage points to 65.4%.

Non-bank finance has been reshaped. Foreign capital has become more important, rising from 6.8% of total flows in FY24, or Rs 2.4 lakh crore, to 11% in FY26, or Rs 4.9 lakh crore. Domestic non-bank sources lost ground, their share falling from 28.7% to 23.6% over the same period.

The rebound in bank credit is especially pronounced. It fell from about Rs 23 lakh crore in FY24 to Rs 18.1 lakh crore in FY25, then expanded by 61.5% in FY26. That figure captures fresh disbursements rather than changes in outstanding stock. Thanks to a year-end surge, by end-March 2026, outstanding bank credit stood at Rs 219 lakh crore, up 16% yearon-year.

Elsewhere the signals diverge. Corporate bond issuance rose 52.4% in FY26 to Rs 3 lakh crore from nearly Rs 2 lakh crore. Commercial paper shrank by 57.8%, pointing to weaker appetite for shortterm funding. External commercial borrowings increased 66.2%, indicating a revival in overseas debt.

Foreign direct investment continued to climb. It grew 11% in FY25 and accelerated to 31.3% in FY26, reaching Rs 3.2 lakh crore.

Together, the numbers suggest a re-banking of corporate finance. Foreign inflows are rising and bond markets are active, but the scale and speed of bank lending now dominate the flow of funds.
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