India’s Non-Food Credit Growth Quickens to 19.1% in September, FX Reserves at $719.7bn

By The Edge Research Team

Non-food bank credit in India grew 19.1% in the year to 30 September, up from 11.2% a year earlier, the Reserve Bank of India said on Friday.

For Indian lenders and borrowers the lending cycle gathered speed through September: each of the four broad sectors the release singles out grew faster than a year earlier and faster than in August. Weekly data published the same day put foreign exchange reserves at $719.7 billion on 23 October, after a $1.27 billion decline that came from the gold line.

In The Edge’s reading, one fortnight of data is too short to show any effect of the 7 October increase in the policy repo rate to 5.50%, set out earlier. Annual growth in bank credit eased to 18.2% on 15 October from 19.4% on 30 September, a quarter-end.

Services credit accelerates the most

Credit to services grew 28.3% on the year, against 9.9% a year earlier. In August the rate was 24.3%, so September added 4 percentage points in a month.

The release cites buoyant growth in segments such as non-banking financial companies, trade, commercial real estate, transport operators and professional services.

Industry and agriculture each grew 19.5%. For industry that compares with 7.7% a year earlier, an acceleration of 11.8 percentage points.

Within industry, large and medium firms accelerated while micro and small firms kept growing steadily. Infrastructure, basic metals, engineering, chemicals, food processing and textiles were among the major industries with buoyant growth.

Agricultural credit grew 19.5% against 8.9% a year earlier. It also picked up from 17.2% in August.

Personal loans grew 17.3%, up from 11.5%, the smallest acceleration of the four sectors. Housing and vehicle loans stayed resilient and advances against fixed deposits picked up; loans against gold jewellery and education loans grew more slowly than a year earlier but remained strong.

Bank credit by sector, year-on-year growth (in %)

Rates as printed in the September and August releases; Sep 2025 is the corresponding fortnight of the previous year, ended 3 October 2025. Non-food credit covers all scheduled commercial banks; the four sectors cover 41 select banks.

The sector figures come from 41 banks that together account for about 95% of non-food credit, the central bank said. Since December 2025 the current-year figures are end-of-month data.

The year-earlier comparison still uses the last reporting fortnight under the old definition. The September 2026 rates therefore compare 30 September with 3 October 2025.

Deposit inflows outrun new lending into mid-October

Bank credit at scheduled commercial banks stood at INR 227.4 trillion on 15 October. At 94.94 rupees per dollar, a rate The Edge derives from the central bank’s reserves table for 23 October, that is equivalent to $2.40 trillion. It was 18.2% more than a year earlier, when annual growth was 11.6%.

Aggregate deposits grew 16.7% on the year, from 9.5% a year before. The ratio of credit to deposits stood at 81.6%.

In rupee terms deposits still grew by more than credit. Over the 12 months banks added INR 39.9 trillion of deposits and INR 35.1 trillion of credit. The credit increase is equivalent to $369.4 billion.

New lending therefore equalled 87.8% of new deposits. A year earlier the figure was 96.3%.

Measured against 30 September, a quarter-end, credit fell 1.1% in the fortnight and deposits 1.8%. Most of the deposit decline was in demand deposits.

For the financial year so far, credit is up 6.5%, against 5.4% at the same point of 2025-26. Deposits are up 6.3%, from 5.8%.

Broad money (M3) grew 16.0% on the year, against 9.2% a year earlier. Bank credit to the commercial sector rose 17.7%. Net bank credit to the government slowed to 8.7% from 9.7%.

Money and banking, year-on-year growth to 15 October (in %)

Deposits and bank credit are for scheduled commercial banks; the other lines are money stock measures. The 2025 column is the year-on-year rate at the same point a year earlier.

The central bank was a net absorber of liquidity on each of the seven days from 19 to 25 October. Net absorption peaked at INR 1.72 trillion on 25 October, equivalent to $18.1 billion.

Most of it went through the standing deposit facility. The Bank also ran variable rate repo injections on four of the seven days.

Lending and deposit rates ease in September

The weighted average lending rate on fresh rupee loans fell to 8.51% in September from 8.61% in August. On outstanding loans it was unchanged at 8.96%.

Rates on fresh term deposits fell too, to 5.61% from 5.67%. The gap between fresh lending and fresh deposit rates narrowed to 2.90 percentage points from 2.94.

The September figures predate the October policy increase. The one-year median marginal cost of funds based lending rate, an October reading, eased to 8.55% from 8.61% in September.

Gold accounts for the weekly dip in reserves

Over the two weeks to 23 October reserves are down $6.28 billion.

In the latest week the gold line fell $2.65 billion, more than twice the week’s net decline. Foreign currency assets rose $1.36 billion.

Since the end of March reserves are up $28.64 billion. Foreign currency assets added $40.92 billion over that period, while gold lost $12.25 billion.

Against a year earlier reserves are $24.39 billion higher. Foreign currency assets rose $26.66 billion and gold fell $2.39 billion.

Foreign currency assets make up 82.4% of reserves and gold 14.3%. Special drawing rights and the reserve position in the IMF account for the rest.

The rate implied by the reserves table, its rupee value divided by its dollar value, was 94.94 rupees per dollar on 23 October, against 94.95 a week earlier.

Foreign exchange reserves on 23 October (in $ millions)

Changes against 16 October and against a year earlier, as printed; components may not add to the total because of rounding. Foreign currency assets exclude the central bank’s SDR holdings, its investment in IIFC (UK) bonds, amounts lent under SAARC and ACU swap arrangements, and its contribution to Nexus Global Payments.

Reserves since end-March, and share of the total

Change from the end of March 2026 to 23 October, as printed; shares are of total reserves on 23 October.

Services surplus widens to $19.2 billion in September

Services exports were $39.31 billion in September, 7.2% more than a year earlier. Imports rose 12.6% to $20.10 billion.

That left a services surplus of $19.21 billion, against $16.54 billion in August. Export growth slowed from 13.7% in August, and import growth from 21.4%.

For July to September together the surplus reached $53.39 billion, on exports of $113.03 billion. The figures are provisional, and the year-earlier growth rates have been revised on balance of payments statistics.

Trade in services (in $ millions)

Provisional data; net is exports less imports.

What to watch: The Monetary Policy Committee meets from 2 to 4 December, its first meeting since the October increase.

Figures are from the Reserve Bank of India’s press releases of 30 October 2026 (the Weekly Statistical Supplement extract, with the 30 September bank credit rate from its extract of 16 October 2026, sectoral deployment of bank credit for September 2026, international trade in services for September 2026, and lending and deposit rates), with August sector rates from its release of 30 September 2026 and the policy rate and meeting dates from the Monetary Policy Committee resolution of 7 October 2026. Percentages, sums, ratios and dollar equivalents not attributed to a source are The Edge’s calculations; rupee amounts are converted at 94.94 rupees per dollar, the rate implied by the reserves table for 23 October.

Sources: Reserve Bank of India, The Edge.

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