India’s festive season has brought more than just cheer this year, it has sparked a significant surge in credit demand across the country. Latest data from the Reserve Bank of India (RBI) shows that between September 5 and October 17, 2025, bank loans increased by over ₹4 lakh crore, reaching a total of ₹192.19 lakh crore. This is more than double the credit expansion recorded during the same festive period last year.
A major factor behind this boost is the recent revision in GST rates, which has made several consumer categories more affordable. Combined with festive discounts and consumer confidence, the market has witnessed a sharp upswing in spending.
Retail Loans Lead the Momentum
The strongest credit push came from the retail loan segment, driven largely by heightened demand for:
Automobiles
Home loans
Consumer durables such as electronics and appliances
Year-on-year, overall credit growth reached 11.45%, the highest in nearly nine months.
Speaking on the trend, Canara Bank CEO K. Satyanarayana Raju highlighted the sharp rise in vehicle loans, noting that they grew by over 25% during the July–September quarter. Lending to micro, small, and medium enterprises (MSMEs) rose 12.7%, reflecting improving business sentiment.
MSMEs Showing Signs of Recovery
The positive momentum among MSMEs is seen as a strong indicator of economic recovery at the grassroots level. With higher consumer spending, small businesses are experiencing increased orders, prompting them to seek additional financing for working capital, production, and expansion.
Inflation Cooling Supports Spending Power
Inflation has also played a supportive role. Consumer prices in September rose just 1.5% year-on-year, down from 2.1% in August, the lowest since mid-2017. Several essential goods saw price drops of up to 10%, freeing up household income.
As families spend less on necessities, discretionary spending rises, boosting demand for lifestyle products, travel, electronics, and home upgrades. This creates a positive cycle more consumption drives more production and stronger business activity.
Outlook Remains Optimistic
Economists believe that if this credit momentum sustains through the financial year-end, India could witness stronger-than-expected GDP growth. The combination of policy support, improved liquidity, festive demand, and rising consumer confidence is shaping a positive economic environment.
As the market enters the post-festive quarter, analysts will be watching whether sustained consumption can continue driving the upward trend in credit growth.
