Credit Growth and Business Expansion | Quick ₹eads

by Karnivesh | 25 February 2026

In a bustling construction site outside Ahmedabad, workers pour concrete for a new expressway funded by government contracts. Nearby, an L&T engineer reviews loan drawdowns from SBI, while UltraTech Cement trucks line up to supply. This scene captures the quiet engine powering India's business expansion: bank credit, growing at 11.4% in 2025 to ₹202 lakh crore outstanding, with deposits at ₹248.5 lakh crore and a record credit-deposit ratio of 81.75%.​

Credit as the Expansion Fuel

Picture a CFO at a mid-sized infra firm in Hyderabad. After securing a ₹500 crore railway order, the first call is to the relationship manager at HDFC Bank for working capital and term loans. Bank credit is the lifeblood of expansion financing capex, inventory, wages, and bridging payments.

India's banking system has come a long way. Corporate credit is poised to grow 16-19% CAGR in the best case, adding ₹100 lakh crore by FY30 as de-levered balance sheets and profitability meet a multi-decade capex cycle. SBI's corporate pipeline alone hit ₹7.9 lakh crore by Dec 2025, up from ₹7 lakh crore prior quarter, with 13.4% growth in its corporate book.

Retail loans drive overall growth (home, gold, auto), but corporate lending's revival signals structural shift. Wholesale credit averaged 10.6% in Q3 FY26, doubling year-ago 5.9%, led by infra, metals, power, renewables, data centres, logistics. Axis Bank corporate loans +27% YoY, Central Bank +23.2%.​

L&T: Credit-backed order machine

Larsen & Toubro has increasingly come to represent the intersection of India’s infrastructure ambition and the banking system’s willingness to fund it. In Q3 FY26, L&T’s order book expanded to an imposing ₹5.5 lakh crore, with domestic infrastructure alone accounting for ₹2.5 lakh crore. This expansion is not occurring in isolation. A significant portion of execution visibility is closely linked to the banking system, particularly public sector lenders.

The State Bank of India pipeline of ₹7.9 lakh crore across highways, metros, defence, power, and urban infrastructure includes meaningful drawdowns for L&T projects. As government-led capex moves from allocation to execution, L&T has become a primary conduit through which policy intent translates into on-ground activity.

Crucially, this growth is credit-enabled. L&T plans nearly ₹10,000 crore of capex in FY26, funded through a mix of internal accruals and external borrowing. While the system-wide credit–deposit ratio has tightened to around 81.75%, nudging corporates toward bond markets, banks continue to play a central role by offering flexibility and structured financing. SBI’s AAA-rated corporate exposure has risen to 44% from 40%, signalling a deliberate tilt toward large, execution-ready balance sheets like L&T’s. The outcome is visible in guidance: ~15% revenue growth in FY26E with stable margins, even amid a rising interest-rate environment.

UltraTech: cement riding the credit cycle

UltraTech Cement, with installed capacity of around 140 MTPA, sits at the heart of India’s infrastructure and housing cycle. Its strategy for FY26 underscores how credit availability underpins sectoral expansion. The company plans 20 MTPA of incremental capacity through a ₹10,000 crore capex programme, with bank loans playing a key role particularly for acquisitions such as its ₹3,954 crore stake in India Cements.

This expansion coincides with a powerful demand backdrop. Government capex of ₹11.21 lakh crore in FY26 continues to support roads, metros, housing, and industrial construction, all of which are cement-intensive. On the financing side, corporate credit growth of ~13% in 2025, driven by capex and working capital demand, has created a supportive funding environment for large balance-sheet players.

UltraTech’s disciplined capital structure debt-to-equity near 0.2x and ROCE above 15% positions it as a preferred borrower. SBI management has noted that the pickup in economic activity has pushed working capital demand up by nearly 400 basis points, a trend that directly benefits companies operating at scale within the construction ecosystem.

SBI and HDFC Bank: lenders fuel the expansion cycle

At the system level, banks are no longer passive financiers but active participants in the investment cycle. SBI’s corporate loan book grew 13.4%, supported by a sanctioned pipeline of ₹7.9 lakh crore, of which ₹3.5 lakh crore has already been disbursed and ₹4.5 lakh crore remains undrawn, providing strong forward visibility. Lending momentum is concentrated in oil & gas, infrastructure, metals, power, and NBFCs, sectors closely tied to capex execution.

HDFC Bank complements this with a more diversified approach. Corporate lending grew 10.3% YoY, while total system credit growth stood at 11.4% in 2025 and is projected at 10.5–11% in FY26, accelerating to 13–14% in FY27. Retail and MSME loans continue to anchor stability, but the revival in corporate credit is adding a second growth engine.

According to ICRA, this corporate upcycle could generate ₹19–20.5 trillion of incremental credit demand in FY26, reinforcing the idea that India has entered a phase where balance-sheet repair is giving way to balance-sheet expansion.

Fintech and co-lending: bridging capital and reach

A key structural evolution supporting this credit cycle is the expansion of co-lending frameworks, especially after refinements announced by the Reserve Bank of India in January 2026. These structures allow banks to contribute capital while NBFCs and fintechs provide origination, underwriting, and last-mile reach particularly to MSMEs.

With the system-wide CD ratio hovering near 82%, co-lending has emerged as a pressure valve. Players like Lendingkart highlight that hybrid models help banks manage balance-sheet constraints while enabling continued credit flow to underserved segments. Fintech lenders themselves are evolving—from pure volume-driven growth toward profitability using AI-led collections and underwriting to cut default rates by nearly 40%.

Even consumer-facing platforms such as PhonePe are recalibrating strategies. At an estimated $13–15 billion valuation, the emphasis has shifted from aggressive expansion to sustainable unit economics, with lenders across the ecosystem targeting EBITDA breakeven within two years.

Big-picture takeaway

Across infrastructure, cement, banking, and fintech, a common thread emerges: India’s current growth phase is credit-backed, not credit-stressed. Large corporates like L&T and UltraTech are scaling on the strength of bank confidence, banks like SBI and HDFC are actively deploying balance sheets into capex-led sectors, and fintechs are filling structural gaps without destabilising the system. This virtuous loop between credit availability and real-economy execution is becoming one of the defining features of India’s FY26 growth cycle.

Expansion Risks and Rewards

Credit expansion risks NPA spikes if slowdown hits GNPA PSBs 2.58% FY25. CD ratio 81.75% strains liquidity; banks tap bonds.

Rewards shine: Private capex +21% ₹2.67 lakh crore FY26, internal accruals dominant but banks fund rest. Corporate credit 16% CAGR opportunity.

SBI Q4 growth guidance 13-15% from 11-12%. ICRA incremental bank credit ₹19-20.5 trillion FY26 (10.4-11.3%).

Credit's Business Boom Blueprint

Credit greases expansion wheels. L&T's ₹5.5 lakh crore orders, UltraTech's capacity adds exemplify.

India's ₹200 lakh crore credit (FY26) fuels ₹100 lakh crore capex opportunity. Balance growth with quality SBI's AAA focus, fintech hybrids.​

As CD ratio hits 82%, selective lending favours infra, renewables. Businesses borrowing wisely expand sustainably, riding 16.5% credit wave to 2026 dominance.