ICICI Bank , one of India's leading private sector banks, is facing escalating GST demands from multiple tax authorities across different states. The bank has now received GST orders totaling ₹253.93 crore from Mumbai and West Bengal authorities for similar issues related to services provided to customers maintaining specified minimum balances.

Latest West Bengal GST Order

On December 30, 2025 at 06:01 p.m., ICICI Bank received an Order under Section 73 of the West Bengal Goods and Services Act, 2017 from the Deputy Commissioner of Revenue, West Bengal. This order follows the Show Cause Notice disclosed by the bank on September 23, 2025 from the same authority.

Mumbai GST Order Details

Earlier, the bank received an Order under Section 73 of the Maharashtra Goods and Services Tax Act, 2017 on December 17, 2025 from the Additional Commissioner of CGST and CEx., Mumbai East Commissionerate. This order raised a total GST demand of ₹237.90 crore.

Combined GST Exposure

The bank now faces combined GST demands from both authorities totaling approximately ₹253.93 crore, all relating to the same underlying issue of services provided to customers maintaining specified minimum balances in their accounts.

Bank's Legal Strategy

ICICI Bank has indicated it will contest both orders through appropriate legal channels. The bank is already in litigation, including writ petitions, on similar issues raised in past orders and Show Cause Notices. For the latest West Bengal order, the bank will take appropriate steps including contesting through an appeal within prescribed timelines.

Regulatory Compliance and Disclosure

Both matters required disclosure to stock exchanges under Regulation 30 of SEBI regulations due to the aggregate amounts crossing materiality thresholds. The bank made disclosures on December 18, 2025 for the Mumbai order and December 31, 2025 for the West Bengal order, demonstrating compliance with transparency requirements while preparing legal challenges.

The Indian banking sector is experiencing a notable transformation in its credit landscape, with credit growth stabilizing and secured retail and MSME lending emerging as key drivers. Public sector banks (PSUs) have regained dominance in the MSME sector, while private banks maintain a selective approach.

MSME Credit Landscape Sees Major Shift

Over the past 6-9 months, PSU banks have successfully re-established their dominance in MSME credit. This resurgence is attributed to several competitive advantages:

This execution-led push is enabling PSU banks to gain substantial market share, particularly in working capital and smaller business loans. Private banks, in contrast, are maintaining a more selective approach, preferring hybrid structures that combine partial guarantees with collateral.

Unsecured Business Lending Undergoes Reset

Unsecured business lending is experiencing a clear recalibration across the sector. Growth has moderated significantly to 10-20% from the previously elevated levels of 30-40% seen in prior years, despite a sharp correction in pricing structures.

Stress pockets remain visible in specific segments, particularly in agri-linked commodity businesses and among FMCG distributors facing elongated working capital cycles.

Housing Sector Shows Continued Resilience

Housing and real estate lending continues to demonstrate resilience despite some cooling from peak growth levels. Disbursement momentum has improved, primarily led by large developers and redevelopment projects.

PSU banks are regaining relevance in the home loan segment, aided by competitive pricing, faster processing capabilities, and normalized distribution commissions. This has driven particular traction in Tier-2 and Tier-3 markets.

Retail Unsecured Products Show Stabilization Signs

Early signs of stabilization are emerging in retail unsecured products. The personal loan and credit card segments are moving past peak stress periods, with early delinquencies stabilizing, though overall delinquency levels remain elevated compared to historical norms.

Stock Recommendations and Outlook

ICICI Bank has received a Buy rating with a target price of ₹1,700, supported by its structural strengths in disciplined risk management, prudent underwriting, and well-diversified loan book.

AU Small Finance Bank has also earned a Buy rating with a target of ₹1,100, supported by margin expansion and controlled credit costs.

Looking ahead, the credit cycle appears to be settling into a more sustainable, execution-driven phase. The medium-term opportunity favors lenders with strong execution capabilities, diversified growth levers, and consistent asset quality as the sector balances growth ambitions with profitability and risk discipline.