Discuss how the sectoral pattern of SCB credit growth in FY 2025-26 reflects the changing structure of the Indian economy.

Q. Discuss how the sectoral pattern of SCB credit growth in FY 2025-26 reflects the changing structure of the Indian economy. (15 marks, 250 words)

Scheduled Commercial Banks (SCBs), listed in the Second Schedule of the RBI Act, 1934, posted 15.9% non-food credit growth in FY 2025-26, up 497 bps over FY25 [1]. More than the headline, its sectoral composition mirrors a maturing, services-led yet re-industrialising economy.

Services leadership → tertiarisation & financial deepening - Services credit surged to 19% (from 12%), the fastest segment, driven by NBFCs, trade and commercial real estate [1] — reflecting the tertiary sector's dominance in GVA and the rise of NBFC-led "pass-through" intermediation.

Retailisation → consumption-driven growth - Personal loans grew 16.2%, now 33% of total credit [1][2] — evidence of a shift from a supply-side to a household-consumption-anchored growth model, powered by vehicle and gold-backed loans.

Industrial revival → manufacturing re-emphasis - Industrial credit nearly doubled to 15% (from 8.2%), with micro & small industries at 33.1% [1][3] — signalling a capex upcycle and MSME formalisation aligned with Make-in-India and PLI.

Agricultural momentum → rural formalisation - Agriculture credit accelerated to 15.7% [1], reflecting KCC penetration and diversification into high-value allied activities (dairy, fisheries).

Thus the pattern captures four structural shifts — services dominance, consumption-led demand, manufacturing revival, and rural formalisation. Sustained through prudent Priority Sector Lending and post-IBC clean balance sheets, this broad-based deepening can convert credit intensity into inclusive, employment-rich growth consistent with Viksit Bharat 2047.

(~245 words)

Sources: 1. PIB — SCBs Record Robust Credit Growth of 15.9% in FY 2025-26 — headline growth, services/personal/agri/industry sectoral rates 2. RBI — Data on Sectoral Deployment of Bank Credit — personal loan share (33%) and credit outstanding 3. PIB — Economic Survey 2025-26 — micro & small industry credit growth (33.1%), industrial capex revival