India's banking sector concluded FY26 on a strong note, achieving a 16.1% year-on-year growth in systemic credit as of March-end. The last fortnight of the fiscal year saw nearly INR 6 trillion in incremental credit, highlighting robust demand across various segments. On the deposit side, growth surged to 13.5% YoY, with banks adding approximately INR 12 trillion in deposits in the last two weeks of March. Despite this progress, the gap between credit and deposit growth remains elevated at 2.6%. Key liquidity indicators showed improvement, with the system-level loan-to-deposit ratio declining to 81.4% from 83% previously. Looking ahead, credit growth is projected to maintain a 14% CAGR over FY27-28. AU Small Finance Bank is recommended for its potential to expand significantly with a universal banking license, while ICICI Bank is noted for its solid performance and diversified growth across segments, with an estimated 16% CAGR in loan growth over FY26-28. Both banks are well-positioned for sustained growth in the evolving banking landscape.