Credit growth may remain subdued despite 100 bps policy repo rate cut

Despite recent rate cuts by the Reserve Bank of India (RBI), Indian banks are reportedly maintaining their credit growth guidance for FY26. This cautious stance suggests that banks anticipate continued demand for credit, possibly driven by economic growth, but are also factoring in other variables. The mention of "CRR awaits" indicates that banks are closely watching for potential changes in the Cash Reserve Ratio (CRR), a tool used by the RBI to manage liquidity. A reduction in CRR would free up more funds for lending, potentially boosting credit growth. However, banks' current guidance suggests they are not yet fully factoring in the impact of potential future RBI actions or are adopting a prudent approach given the broader economic landscape. This reflects a balanced outlook, acknowledging monetary policy shifts but also considering intrinsic demand and regulatory uncertainties.