Bank Stocks Outlook: Rising Liquidity, Credit Growth Could Boost Banks Over Next 6–12 Months

FCNR deposit inflows have improved liquidity in the banking system, offering potential support to credit growth and bank profitability. The stronger inflows have also helped stabilize the rupee, although banks could continue facing some pressure on net interest margins in Q2 and Q3. Avinash Gorakshakar, Founder, Avinash Mentor Research, expects credit demand from both corporate and government sectors to rise as India’s GDP growth and capital formation remain strong. Increased government and private-sector CapEx, along with working capital requirements, could support lending growth. He remains positive on private-sector banks and NBFCs, advising investors to stay invested as increased credit flows could drive incremental business over the next six to twelve months.