Throughout the course of the last several decades, the financial sector in India has been confronted with a number of significant problems. Additionally, the country has been suffering with a percentage of credit to GDP that is large and unfavourable ever since the year 2012. In order to explore the influence that cyclical financial conditions have on the growth of GDP, we make use of a method that is referred to as “growth-at-risk (GaR). Using panel regressions at the bank level, we also investigate the relationship between bank balance sheets, loan expansion, and long-term growth for both public and private banks. This is done for both types of banks. Both sorts of banks are subject to this procedure. When seen from a cyclical perspective, the pattern of economic growth distribution exhibits a shift to the left. This movement is observed when we look at the pattern. This shift is the result of adverse impacts on loan availability or an increase in the vulnerability of the macroeconomic system. Consequently, this results in a reduction in the growth that was anticipated, as well as an increase in the likelihood of experiencing significant detrimental impacts. With the passage of time, it has been clearly evident that there is a positive link between increased credit growth, which originates from banks with decreased nonperforming loans and higher capitalization, and improved GDP development. This association is a positive indication of the relationship between the two.