Mumbai: Bank lending to industry in the first two months of FY27 was led by the power sector, followed by chemicals, and vehicles, even as exposure to telecommunications declined, reflecting a shift in sectoral credit allocation by lenders.According to data for the period between end-March 2026 and end-May 2026, gross bank credit to industry rose by Rs 39,599.2 crore, increasing from Rs 45.8 lakh crore to Rs 46.2 lakh crore. This expansion was concentrated in a few sectors, with power, chemicals, and vehicles accounting for the bulk of incremental lending.
Personal loans lead in overall share
Power subsector recorded the single largest increase, with outstanding credit rising by Rs 15,399.9 crore from Rs 8.4 lakh crore to Rs 8.6 lakh crore, a growth of 1.8%.Suresh Ganapathy, analyst with Macquarie, said in a recent report that lenders have been increasing their exposure to the power sector in FY26. “Private sector banks have been quite aggressive here and note that they do not lend to state electricity boards. So these are all either the PSU power companies like NTPC, PowerGrid or private sector power projects…Axis in fact has seen doubling of their power sector exposure in the last 12 months”.Ganapathy said this trend is driven by improved execution in transmission capacity and continued traction in renewable energy capacity addition. Bankers have indicated that renewables remain an area of strong growth. “Right now demand is expected to be strong and secular driven by lot of factors (hot summers, data centres, electric cooking etc ) – whole host of factors and there isn’t any issue of excess supply now,” he said.After several years growth in bank credit to industry (17%) has outpaced growth in personal loans (15.4%) and kept pace with overall credit growth of 17.7%. However, the share of industry in overall bank credit continued to slip, falling to 22.8% in May 26 from 23.4% in May 2024.The overall infrastructure sector recorded a net increase of Rs 14,481.6 crore, with credit rising from Rs 14.9 lakh crore to Rs 15 lakh crore, a growth of 1%. The increase in the power subsector exceeded the total infrastructure sector growth due to a sharp contraction in telecommunications, where credit declined by Rs 10,949.6 crore.Other segments within infrastructure also contributed positively, with other infrastructure rising by Rs 5,790.3 crore, roads by Rs 1,851.3 crore, and airports recording a 20.7% increase during April to May 26.