According to a report by Crisil Ratings, bank credit in India is projected to grow by 13% in fiscal year 2027, driven largely by robust demand from the micro, small, and medium enterprises (MSME) and retail sectors. This growth is a slight decline from the 14% growth estimated for FY26. The MSME sector, which accounts for 19% of domestic bank credit, is expected to remain the fastest-growing segment, although its growth rate may moderate from the 24-25% level seen in FY26 due to tempering economic growth. Retail loans, which make up 33% of bank lending, are anticipated to grow at 14%, benefiting from competitive home loan rates. However, the ongoing conflict in West Asia poses risks to credit growth by potentially dampening private sector investment while simultaneously increasing demand for working capital. The report highlights the importance of deposit growth, which has recently widened the gap with credit growth, standing at 300 basis points as of March 15, 2026. Regulatory measures, including a phased reduction in the cash reserve ratio, have provided liquidity support for banks amidst muted deposit growth. As geopolitical uncertainties continue, they could pose downside risks to India's economic outlook and, in turn, affect bank credit growth.