Daijiworld Media Network – New Delhi

New Delhi, Nov 24: India’s lending landscape witnessed a decisive shift toward secured credit in Q2 FY26, with banks and NBFCs tightening their exposure to risky segments and prioritising asset quality, according to the latest CRIF High Mark report.

With stricter norms on unsecured lending, institutions expanded their portfolios in secured categories such as gold loans, home loans and business credit, while cutting back on new-to-credit customers and reducing credit card issuances.

Gold loans lead growth

Gold loans posted the fastest expansion among major retail credit products, rising 35.8% YoY and 8.6% QoQ to reach Rs 14.5 lac cr in September 2025. Origination value grew 53% annually, with loans above Rs 5 lakh forming the largest share.

“Regulators and banks have tightened norms in unsecured personal and microfinance segments. Naturally, individuals and small businesses are opting for gold loans as a reliable and convenient financing option,” said George Alexander Muthoot, MD, Muthoot Finance.

Home loans expand with larger ticket sizes

Home loan portfolios grew 11.1% YoY and 2.1% QoQ, touching Rs 42.1 lac cr. The average ticket size rose sharply to Rs 33.2 lac, compared to Rs 31 lac a year earlier. PSU banks led originations, overtaking private lenders with a 50% share.

Unsecured loans slow; credit cards see two-year dip

Lenders significantly reduced exposure to unsecured products. The share of new-to-credit borrowers declined across categories, and credit card issuances fell to 44 lac, continuing a steady two-year slide.

“After two years of rapid growth, lenders are becoming more selective and tech-driven, prioritising risk prudence,” said Anil Rawat, Risk Head, IDFC FIRST Bank.

Business credit and personal loans maintain momentum

Despite tighter lending norms, business credit to sole proprietors jumped 24.6% YoY, taking the portfolio to Rs 46.7 lac cr. Origination value rose 11.4% YoY, reflecting strong demand in the MSME segment.

Personal loans grew at a measured pace of 12% YoY, with origination value rebounding 32% QoQ to Rs 2.92 lac cr. PSU banks drove demand for loans above Rs 10 lac, while NBFCs retained a dominant share in smaller-ticket lending.

“India’s personal loan industry has moved from high-velocity growth to disciplined, quality-first expansion,” said Manhish Kumar Gupta of L&T Finance.

Vehicle Finance revives on GST 2.0 and rural demand

Auto loan portfolios registered 16.3% YoY growth, supported by strong monsoon-led rural demand and early festive buying.

“GST 2.0 recalibrated vehicle affordability, and rural markets showed pent-up demand,” said Vivek Chopra, COO-Retail, Tata Capital.

Two-wheeler loans increased 14.9% YoY, with more borrowers opting for higher-value models. Loans in the Rs 1–1.5 lakh range rose from 21.2% to 29% in two years.

Asset quality strengthens except in auto loans

Mid-stage delinquencies improved in most categories, though auto loans saw portfolio-at-risk (31–180 days) rise from 2.8% to 3.1%, largely due to NBFC stress. Two-wheeler loans recorded a PAR of 5.5%, while credit cards continued to report the highest delinquency at 4.1%.

Private banks saw a slight uptick in early-stage stress (PAR 31–90 at 2.25%) but improved performance in the 91–180 bucket.