The latest FICCI-IBA Bankers’ Survey, conducted between January and February 2026, reveals a cautiously optimistic sentiment within the banking sector for the upcoming six months. With participation from 24 banks, including Public Sector Banks, Private Sector Banks, Foreign Banks, Small Finance Banks, and Cooperative Banks, the survey indicates a generally positive outlook on credit growth, bolstered by healthy balance sheets and sustained economic activity. The findings suggest that banks are increasingly focusing on sustainable finance opportunities, particularly in renewable energy financing, which is viewed as having the most significant growth potential.
The survey highlights that Artificial Intelligence (AI) is regarded as the most transformative force anticipated to reshape banking operations, influencing areas such as credit underwriting, risk evaluation, and collections. However, as financial institutions navigate this technological evolution, cybersecurity risks emerge as the most pressing challenge, underscoring the need for enhanced resilience amid growing digitalization.
Respondents from the banking sector express confidence in the stability of the current monetary policy, suggesting it is well-calibrated to balance growth and inflation in the months ahead. While optimism prevails regarding overall credit expansion, Public Sector Banks demonstrate especially strong confidence, attributed to improved asset quality and capital positions, along with a notable uptick in corporate lending. Private Banks are taking a more cautious stance, opting for a balanced and selective approach to credit growth, while Foreign Banks maintain moderate optimism aligned with their focused exposure to corporate segments.
Sector-wise analysis reveals a robust demand for credit from the services and retail sectors, which are expected to play a crucial role in lending growth. The services sector is projected to expand significantly, driven by increased activities in real estate, financial services, logistics, and tourism. Retail lending is also expected to remain solid, reinforcing its role as a fundamental element within the banking landscape. Small and Medium Enterprises (SMEs) are anticipated to continue driving credit demand, with respondents expressing confidence in their ongoing expansion.
In contrast, growth in industrial credit is expected to proceed at a more gradual pace, reflecting a recovery rather than a rapid surge. Investment activity is anticipated to be consistent, particularly in infrastructure development and manufacturing sectors, supported by government-led capital expenditures. Demand for term loans is expected to be driven by sectors such as infrastructure, real estate, automotive, pharmaceuticals, and emerging industries like data centres and defense.
Conversely, the need for working capital appears to be closely linked to trade cycles and operational financing requirements. Industries such as textiles, automobiles, pharmaceuticals, engineering goods, and food processing are expected to be the primary drivers of industrial working capital borrowing. In the services sector, the demand for working capital is likely to be led by wholesale and retail trade, as well as transport operators, tourism, and hospitality.
As banks navigate these challenges and opportunities, a strategic focus on climate risk management and financial inclusion is gaining traction. The survey underscores an industry-wide commitment to sustainability, with banks prioritizing green financing initiatives in line with India’s long-term energy transition goals.
Looking ahead, the growing significance of sustainable finance, particularly in renewable energy, reflects broader global trends towards green investments. This shift not only aligns with emerging environmental priorities but also represents a critical factor in ensuring the future resilience of the banking sector. As the industry embraces these changes, the dual focus on traditional banking priorities and innovative solutions will be essential for navigating the evolving landscape.
See also
Finance Ministry Alerts Public to Fake AI Video Featuring Adviser Salehuddin Ahmed
Bajaj Finance Launches 200K AI-Generated Ads with Bollywood Celebrities’ Digital Rights
Traders Seek Credit Protection as Oracle’s Bond Derivatives Costs Double Since September
BiyaPay Reveals Strategic Upgrade to Enhance Digital Finance Platform for Global Users
MVGX Tech Launches AI-Powered Green Supply Chain Finance System at SFF 2025
