While originations for larger loans such as home, auto, and personal loans above Rs10 lakh continued to grow, there was a noticeable deterioration in repayment behaviour for loans under Rs1 lakh, particularly in personal loans, two-wheeler finance, and microcredit, says the ‘How India Lends’ report released by CRIF High Mark Credit Information Company.

Sachin Seth, chairman of CRIF High Mark, says risk aversion by lenders and regulatory guidelines have shaped lending trends across categories, leading to a recalibration in lender strategies. "Risk management remains a key priority, with early-stage stress showing improvement, though later-stage delinquencies continue to pose challenges, particularly among subprime borrowers and low-value loans. Lenders are refining credit policies to balance portfolio risk and sustain growth amid evolving market conditions," he says.

Backed by nationwide credit bureau data, the CRIF High Mark report highlights a recalibration of lender strategies in response to inflation, regulatory interventions, and changing borrower profiles. Public sector banks (PSBs) emerged as leaders in home loan originations, while non-banking financial companies (NBFCs) rapidly expanded their footprint in personal, two-wheeler, and consumer durable loans. However, the sharp increase in delinquency rates, especially among subprime and new-to-credit customers in low-value loans, has raised red flags across the financial ecosystem.

According to the report, India’s total consumption loan portfolio reached Rs103.1 lakh crore in FY24-25, marking a year-on-year (y-o-y) growth of 14.7%. "However, this expansion was marked by sharp contrasts across segments. Home loan originations grew by just 2.7%, a significant slowdown from the 9.9% rise seen in FY23-24, while personal loan originations declined 2.9% in value to Rs8.8 lakh crore." 

"The credit card segment saw the steepest fall, with new issuances plummeting by 26.4% in volume. Microfinance lending also faced considerable strain, with volumes dropping 33.7% year-on-year (y-o-y). Amid this changing landscape, NBFCs increased their market share across categories—particularly in personal loans and consumer durable financing—while PSBs emerged as the dominant players in home loan originations, capturing 42.9% of the market by value," CRIF High Mark says.

The home loan segment maintained steady portfolio growth at 13.1%, but originations slowed to 2.7% y-o-y, signalling headwinds from elevated property prices and tighter lending norms. Volumes fell 5.4% from FY23-24.

PSU banks led home loan originations in FY24-25, growing their share to 42.9% (by value), while private banks saw a decline. High-ticket loans (over Rs75 lakh) gained share in origination value, rising from 31.3% in FY23-24 to 35% in FY24-25, the report says.

"Delinquencies remained subdued for larger loans, but sub-Rs5 lakh loans showed worsening trends in both early (portfolio-at-risk (PAR)-31-90) and later-stage (PAR 91-180) stress," it added.

Personal loan origination value declined 2.9% y-o-y to Rs8.8 lakh crore in FY24-25, while origination volume rose modestly by 8.3%, down from 26.9% in FY23-24. This points to a clear shift towards small-ticket lending.

NBFCs emerged as dominant players, expanding originations value share from 32.2% to 36.4%, and volume share from 86.3% to 91.2%, the report says.

Delinquency trends raised red flags:

• PAR 91–180% for NBFCs rose to 4.37%

• High stress in sub-Rs1 lakh loans, especially those under Rs10,000

According to the CRIF High Mark report, two-wheeler loan origination value rose 10.6% y-o-y to Rs 1.1 lakh crore, but the growth rate slowed from 25.1% in FY23-24. Volumes also saw tempered growth at 6.9%.

NBFCs captured over 68% of the market (by value), with a heavy tilt toward new-to-credit (NTC) customers. Loans above Rs75K saw significant gains, driven by higher vehicle prices.

However, risk indicators deteriorated:

• Private bank delinquencies in PAR 91–180 rose from 1.17% to 1.60%

• NBFCs witnessed volatility, highlighting geographic and segmental risk pockets

Auto loan growth moderated to 5.2% in FY24-25, down from 15.3% in FY24, the report says, adding origination value reached Rs3.6 lakh crore, with PSBs gaining share from private banks.

Larger ticket sizes (Rs10 lakh and above) now form 49.1% of originations by value, up from 36.5% in FY21-22—reflecting the effect of rising vehicle prices and a preference for premium models, it says.

However, according to the report, delinquencies remained relatively stable across lenders, though NBFCs showed rising stress in early and later-stage PARs.

Consumer durable loans saw originations value rise modestly by 3.3% to Rs1.6 lakh crore, marking a slowdown from 18% growth in FY23-24, CRIF High Mark says.

According to the report, NBFCs dominated originations, commanding an 80.9% share by value. "The shift toward mid-range loan sizes (Rs25,000 to Rs50,000) continued, driven by digital equated monthly instalment (EMI) schemes and point-of-sale financing.”

"Delinquency pressure increased, particularly for loans above Rs50,000. PAR 91–180% saw deterioration across NBFCs and private banks," it added.

In a surprising trend reversal, CRIF High Mark says new credit card issuances fell 26.4% y-o-y in FY24-25, down to 216 lakh cards from a high of 294 lakh in FY23-24. Private banks remained dominant but faced competitive headwinds, it added.

"While short-term delinquencies (PAR 1–30) improved, long-term stress surged, with PAR of over 90 rising to a staggering 15%, indicating repayment pressures post-Covid-era credit expansion," the report says.

Lending trends within the MSME and microfinance sectors presented a complex picture in FY24-25, CRIF High Mark says. "For entity-level MSME loans, the value of originations dropped by 7.4% y-o-y, indicating caution among lenders; however, the volume of these loans grew by 17.1%, suggesting wider distribution of credit across smaller-ticket borrowers. In contrast, individual MSME loans—typically availed by self-employed individuals—saw a 4.5% increase in origination value, but loan volumes declined by 11.4%, pointing to a preference for slightly larger loans among fewer borrowers."

According to the report, the microfinance sector saw the sharpest contraction, with the overall portfolio outstanding shrinking by 13.9% to Rs3.8 lakh crore. It says, "Originations volume in this category plummeted by 33.7%, as lenders recalibrated their exposure amid rising delinquencies and macroeconomic pressures. Notably, the average ticket size in microfinance rose by 11.1% to Rs51,300, reflecting a strategic shift toward lending to more creditworthy or financially resilient borrowers."

CRIF High Mark says the rising delinquencies in small-ticket, unsecured segments underscore the urgent need for targeted risk mitigation strategies and enhanced credit bureau oversight, especially for emerging borrowers. "Public sector banks and NBFCs are increasingly playing a dominant role in credit expansion, particularly in segments where private banks have slowed down due to risk concerns or regulatory pressures."

"The continued shift towards high-value loans—spanning home loans, personal credit, auto, and two-wheeler finance—points to both inflationary trends and changing consumer aspirations. In parallel, microfinance and MSME lending trends reflect a landscape in transition, marked by caution but also potential. With support from fintech innovation and government-backed platforms like Udyam Assist, these sectors could regain momentum while promoting inclusive growth," the report concludes.