New Delhi, July 6 -- Indian banks are expected to see an improvement in the credit-to-deposit (CD) ratio in FY27, led by public sector banks (PSBs), while overall credit growth is likely to remain steady at around 14 per cent year-on-year, according to a report by Motilal Oswal Financial Services (MOSFL).

The report said systemic credit growth rose to 17.7 per cent as of June 15, 2026. The growth was driven by strong demand for working capital loans due to higher input costs, a regulatory shift from the loan-to-deposit ratio (LDR) to the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR), and higher corporate borrowings following the rise in bond yields during the first quarter of FY27.

MOSFL also said the Reserve Bank o...