The largest private sector lender HDFC Bank’s gross advances rose 16.3 per cent year-on-year to Rs 32.19 lakh crore as of September 30, 2026: Reports
MUMBAI: Indian banks reported strong credit and deposit growth for the second quarter of FY27 as per the provisional estimates released by two dozen lenders in the last few days. Most banks indicated that stress across secured and unsecured loans remain controlled and thus slippages, and
credit costs are expected to remain steady.
However, analysts said that they remain watchful of the adverse impact of the uncertain macro environment on domestic business growth and asset quality, alongside a below-normal monsoon.
The largest private sector lender HDFC Bank’s gross advances rose 16.3 per cent year-on-year to Rs 32.19 lakh crore as of September 30, 2026, while period-end deposits grew 18.8 per cent to approximately Rs 33.27 lakh crore.
The bank also said it mobilised foreign currency deposits equivalent to $11.5 billion under the RBI’s concessional swap facility for FCNR(B) deposits from June 8–August 31, 2026. HDFC Bank's overseas
branches extended loan facilities of $5.7 billion against these deposits, while standby letters of credit issued to other banks in respect of loans against these deposits aggregated to $3.1 billion.
Yes Bank reported a 23.8 percent year on year growth in total loans at Rs 3.1 lakh crore, while the bank’s deposits saw a growth of 19.5percent to reach Rs 3.54 lakh crore.
RBL Bank’s total deposits rose 34 per cent year-on-year (Y-o-Y) to Rs 1.56 lakh crore in the quarter ended September 30 while gross advances grew 40 per cent to Rs 1.43 lakh crore.
Similarly, other lenders including Bank of Baroda, Punjab National Bank, Indian Bank, UCO Bank, Kotak Bank reported double digit credit and deposit growth for the second quarter of 2026-2027.
According to analysts, most key profitability drivers of Indian bank are flashing in green. Systemic credit growth remained healthy at 18.8 per cent as of Sep 15, 2026 sharply higher than 10-11 per cent a year ago driven by sustained retail demand and higher utilization levels by MSME borrowers, healthy corporate borrowings with bond yields being elevated.
On the other hand, higher-than-expected FCNR(B) flows of $ 133 billion aided deposit growth at 17.3 per cent. Public sector banks (18.4 per cent) continue to outpace private banks (16.8 per cent), gaining retail market share for the eighth consecutive quarter.
According to Yuvraj Choudhary, research analyst at Anand Rathi research, the net interest margin outlook for banks is improving due to high probability of a 25-50 basis points rate hike.
“Despite multiple global macro headwinds, asset quality remains benign across segments. High provisioning coverage of 76 per cent and capital adequacy means that the sector is better positioned than any time in the past to absorb any unseen asset quality shocks.
Nonetheless, any significant asset quality pressure in prime retail due to AI related
job loss and in subprime retail/MSME due to impact of El Niño/high inflation remains a key risk to our positive stance,” added Choudhary.
“NIMs for private banks are expected to be adversely impacted by rapid business growth owing to FCNR(B) inflows and the leverage provided by the banks against the same. NIMs are expected to gradually improve as banks deploy the funds for lending and retire high-cost liabilities.
Large private banks are likely to witness an adverse impact of 8-20 bp. For public sector banks, NIMs are likely to be range-bound owing to the lower proportion of FCNR(B) deposits mobilized as a percentage of overall deposits and the focus on retiring high-cost liabilities,” said analyst at Motilal Oswal Financial Services.
