HSBC Raises India Loan Growth Forecast to 18 Percent
HSBC increased its loan growth forecast for India to 18 percent following a surge in corporate and small business borrowing in October.
India's credit growth accelerated to 21 percent year-on-year in October, fueled by borrowing increases from micro, small, and medium enterprises at 25 percent and corporate segments at 24 percent. In response to this momentum, HSBC raised its loan growth forecast for the current financial year to approximately 18 percent, up from a previous estimate of 14 percent. Deposit growth also climbed to over 17 percent, supported by FCNR(B) deposits.
Economic activity has been bolstered by the Government of India, which spent 42 percent of its full-year capital expenditure budget by August and maintained annual infrastructure spending exceeding 3 percent of GDP. These measures, alongside rising services exports and new free trade agreements, have cushioned the economy against oil price shocks. Funds flowing to the commercial sector rose to 6.6 percent of GDP during April-September 2026, compared to 4.7 percent the previous year, signaling a rebound in private capital spending.
Despite the growth, HSBC warns of risks including consumer price inflation, which hit a 23-month high of 5.5 percent in September. The bank also flagged weak rural demand resulting from heatwaves and deficient monsoon rainfall, which may pressure household spending and corporate margins.
