The Covid-19 pandemic has impacted every sector of the economy; the magnitude of impact is different in each sector. This pandemic has badly impacted the Indian banking sector. The credit growth has been declined in various bank's credit segments, which resulted in pressure on net interest margins and the bank's profitability. The present paper is an attempt to highlight the sector-wise trends in the credit growth of Indian banks. This paper highlights the banker's psychological biases developed due to uncertainties caused by the Covid-19 pandemic. The sectors like logistics, international trade, and manufacturing are showing negative credit growth, whereas the demand for consumer credit and loan against shares, bonds, fixed deposits has been increased. RBI has infused Rs. 8 lakh crores to Rs. 9 lakh crores liquidity into the system, but these measures are not adequate to boost the bank's credit growth due to risk aversive behaviour of bankers. The paper concluded that the banker’s risk-aversive behaviour has resulted into sluggish credit growth.

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Keywords: Risk-Aversion, Bank’s Credit, Covid-19 Pandemic.

JEL Classification: G2, G4, G53