Finance – India’s Retail Loan Market Sees Strong Growth in FY26

Finance –  India’s retail lending sector recorded strong momentum during the financial year ended March 2026, with the overall portfolio climbing to Rs 170.2 lakh crore. According to a report released by CRIF High Mark, the sector registered a 16.6 percent increase compared to the previous year, while quarterly growth stood at 4.6 per cent.

Consumption Loans Continue Upward Trend

The report noted that consumption-driven lending remained a key contributor to the expansion. Outstanding consumption loans reached Rs 118.6 lakh crore, reflecting a 15.3 per cent rise on a yearly basis. Growth was supported by steady demand across personal finance products, gold-backed borrowing, and consumer durable financing.

Among all categories, gold loans posted the strongest growth. The outstanding portfolio in this segment rose to Rs 18.6 lakh crore, recording a sharp 50.4 per cent year-on-year increase. Analysts attributed this rise to favourable gold prices and higher collateral valuations, which encouraged borrowers to opt for secured credit.

Personal and Consumer Durable Loans Gain Pace

Personal loans also maintained healthy demand during the year, growing 12.9 per cent compared to FY25 levels. Consumer durable financing expanded even faster, recording a 20.8 per cent annual increase as households continued spending on appliances and electronic products.

Vehicle financing remained stable despite some moderation after the festive season. Auto loans and two-wheeler loans registered growth between 13.9 per cent and 15.1 per cent year-on-year, though quarterly demand eased slightly after earlier seasonal spikes.

The report highlighted that loan portfolio growth across most categories exceeded the increase in active borrowers. This trend suggests that average loan sizes are becoming larger, reflecting a shift toward premium lending products and higher-value borrowing.

Retail Loan Originations Show Significant Jump

Fresh loan originations witnessed notable acceleration in the fourth quarter of FY26. The total value of new retail loans increased by 42.2 per cent from a year earlier and rose 9.2 per cent compared to the previous quarter.

Gold loans emerged as the leading segment in terms of fresh disbursement growth. Personal loans and consumer durable loans also reported annual growth exceeding 30 per cent, indicating sustained consumer appetite for credit-backed purchases and spending.

The report further observed that lenders are increasingly focusing on secured lending categories. Financial institutions appear to be shifting their strategies toward collateral-backed products as they seek to balance expansion with risk management.

Housing Loans Maintain Steady Performance

Home loans continued to deliver stable performance during FY26. Outstanding housing credit reached Rs 44.4 lakh crore, recording 9.4 per cent annual growth along with a 3.4 per cent sequential increase.

The housing finance segment benefited from larger average ticket sizes and continued demand from homebuyers in both urban and semi-urban markets. The report also pointed to rising credit penetration in smaller towns and rural regions, where access to formal lending has steadily improved.

At the same time, credit card balances remained relatively weak compared to other retail lending categories. Outstanding balances were largely unchanged from the previous year and slipped on a quarterly basis, reflecting cautious consumer spending after the festive season.

Asset Quality Improves Across Segments

Despite rapid expansion in retail lending, portfolio quality showed improvement across most loan categories. Delinquency levels declined during the period, indicating stronger repayment behaviour among borrowers and improved asset quality for lenders.

The report concluded that India’s retail lending market is increasingly being shaped by secured borrowing trends, rising loan values, and deeper penetration into non-metro regions. Industry observers believe these factors could continue supporting growth momentum in the coming quarters, even as consumer spending patterns normalise after seasonal demand cycles