New Delhi, May 11 -- In a world beset by uncertainty, a 14% plus year-on-year growth in bank credit during December 2025 to February 2026 is reason for cheer. To be sure, part of this reflects a normalization of the credit cycle which saw brief disruption in mid-2025 triggered by US President Donald Trump's tariff announcements. But the more important shift is that the drivers of this credit expansion are not the same as in the 2022-24 phase.

About 12% of incremental bank credit is being driven by lending to micro, small and medium enterprises (MSMEs), double the sector's 6-7% contribution in 2023. This surge is likely the outcome of a series of measures aimed at widening MSME access to credit.

A significant hike in MSME investment and ...