New Delhi, Feb. 16 -- Despite witnessing tough conditions in the third quarter, loan growth will improve from the second half of Financial Year (FY) 2026, driven by a recovery in the unsecured segment and a gradual pickup in private capital expenditure (capex), according to a report by Mirae Asset Sharekhan.

The report added that the expectations are supported by better liquidity and rate cuts by the Reserve Bank of India (RBI).

It added that shallow rate cut expectations should help support net interest margins (NIMs). Additionally, the report adds that the credit costs are anticipated to normalise as stress in the unsecured segment stabilises.

The third quarter of FY2025 has been challenging for the banking sector due to the higher c...