New Delhi, March 31 -- Indian banks are expected to register loan growth of 12-14 per cent in the financial year 2025-26 (FY26), driven by an increase in deposit inflows, according to a report by Ambit Capital Research.

The report highlighted that the banking sector has started seeing some relief in loan-to-deposit ratios (LDRs) after facing challenges related to liquidity and asset quality. This improvement is mainly due to a gradual rise in deposits and a slower pace of loan disbursements.

Experts believe that this trend will be reflected in the period-end LDR as well. Additionally, easing liquidity conditions and a possible reduction in risk weights on unsecured retail loans are expected to support steady loan growth.

It said "With ...