Bank Advances Against Fixed Deposits Jump 53% Driven by FCNR(B) Deposits

Loans extended by Scheduled Commercial Banks against fixed deposits, including Foreign Currency Non-Resident (FCNR)(B) deposits, experienced a notable increase of 53.3 percent year-on-year, reaching ₹2.17 trillion as of September 30, 2026, according to the Reserve Bank of India’s latest figures.

This sharp rise contrasts with the 14.3 percent growth recorded in the previous year for the same category, which also covers advances against other specified deposits. The significant uptick was largely driven by banks providing credit against FCNR(B) deposits gathered under the concessional swap scheme introduced on June 8, 2026.

By August 31, 2026, banks had mobilized $133 billion through these deposits under the scheme, reflecting strong uptake in this lending niche. The scheme’s initiation appears to have encouraged banks to increase advances secured by these foreign currency deposits, which are typically held by Non-Resident Indians and eligible foreign nationals.

Overall bank credit in the country grew 19.4 percent year-on-year, reaching ₹229.95 trillion by the end of September 2026. This represents a considerable acceleration compared to the 11.4 percent growth during the same period last year. Non-food credit, which excludes agricultural lending, rose by 19.1 percent to ₹228.98 trillion.

The personal loans segment also saw healthy expansion, with a 17.3 percent increase compared to 11.5 percent a year earlier. This category includes retail loans such as housing, vehicle, education, and loans against gold. The RBI highlighted that while housing and vehicle loans maintained steady growth, advances against fixed deposits showed marked acceleration.

Loans against gold jewelry, a popular form of secured lending in India, surged 83 percent year-on-year to ₹5.6 trillion, underscoring the rising demand for collateralized credit facilities. Education loans and gold loans continued to grow but at a comparatively slower pace than in the previous year.

Among major sectors, credit to the services industry recorded the fastest growth, jumping 28.3 percent to ₹64.9 trillion. This sector includes trade, transport, communication, and financial services, which are vital contributors to the economy. Agricultural credit also expanded at a robust pace of 19.5 percent to ₹28.19 trillion, more than double the previous year’s growth of 8.9 percent.

Lending to Non-Banking Financial Companies (NBFCs) rose sharply by 41.8 percent to ₹22.53 trillion, a significant acceleration from the 3.7 percent growth seen a year earlier. These institutions play an important role in extending credit to sectors that banks may not always serve directly.

Industrial credit grew by 19.5 percent to ₹49.77 trillion. Within this, medium enterprises saw credit growth of 33.2 percent, while micro and small enterprises experienced a 24.4 percent rise in lending, reflecting increased financial support to businesses of various scales.

The weighted average lending rate (WALR) on fresh rupee loans granted by scheduled commercial banks dropped slightly to 8.51 percent in September 2026 from 8.61 percent in August. The WALR on outstanding rupee loans remained steady at 8.96 percent during the same period.

Breaking down by bank groups, public sector banks saw their WALR on new loans decrease to 7.93 percent, while foreign banks offered an average rate of 7.76 percent. Private sector banks continued to have the highest lending rates, with a WALR of 9.19 percent on fresh loans. For outstanding loans, the rates were 8.39 percent for public sector banks, 8.01 percent for foreign banks, and 9.82 percent for private sector banks.

This data highlights the evolving lending landscape in India, where credit growth is being supported by a broad mix of sectors and secured advances, including those backed by fixed deposits and foreign currency deposits. The RBI’s figures suggest an overall strengthening of credit flow to households, businesses, and financial intermediaries, which is crucial for sustaining economic activity and growth.