India's retail credit sector demonstrated remarkable resilience and growth during the second quarter of fiscal year 2026, according to the latest industry report. The financial landscape witnessed significant shifts in lending patterns, with secured loans gaining prominence and public sector banks expanding their market presence.
Gold Loans Emerge as Fastest-Growing Segment
The CRIF High Mark study titled 'How India Lends - Q2 FY26' revealed that gold loans maintained their position as the fastest-expanding credit category. The portfolio outstanding for gold loans surged by 35.8% year-over-year and 8.6% quarter-over-quarter, demonstrating sustained momentum.
Originations value in the gold loan segment reached ₹604.7 crore in Q2 FY26, marking a substantial 53% annual increase and 1.2% quarterly growth. The average ticket size for gold loans climbed to ₹1.64 lakh, while asset quality showed improvement across all lender categories including PSU banks, private banks, and NBFCs.
Large-Ticket Personal Loans Dominate Lending Landscape
Personal loans exceeding ₹10 lakh emerged as the dominant force in the retail credit market, capturing 37.4% of total originations by value in Q2 FY26. This represents a significant jump from the 30.2% share recorded in the previous quarter, indicating robust demand for high-value credit.
Public sector banks primarily drove this expansion in large-ticket personal lending. Meanwhile, the personal loan portfolio outstanding grew by 12% year-over-year and 2.9% quarter-over-quarter, supported by a sharp recovery in originations to ₹2.92 lakh crore - representing a substantial 32% quarterly increase.
Market Share Shifts Among Lenders
The competitive landscape witnessed notable changes as PSU banks significantly increased their market share from 26.9% in Q1 FY26 to 35.5% in Q2 FY26, likely driven by strong consumer demand for large-ticket loans.
Concurrently, private sector banks experienced a decline in market share from 28.2% to 24.7%, while NBFCs saw their share drop from 41.0% to 37.0% during the same period. Despite this reduction, NBFCs continue to dominate by volume, accounting for over 90% of total originations volume.
The small-ticket loan segment (under ₹1 lakh) presents an interesting dynamic - while comprising only 17% of total originations value, these loans make up nearly 90% of originations volume, highlighting NBFCs' continued dominance in small-ticket personal lending alongside the rising influence of FinTech companies.
Seasonal Trends and Sector Performance
The start of the festive season provided a significant boost to home and auto loans, which rebounded sharply during the quarter. However, consumer-durable loans and two-wheeler loans experienced softening due to seasonal factors, showing a quarter-on-quarter decline.
Bhargavi Sridharan, Head of Aditya Birla Capital Digital, commented on the evolving landscape: "The personal loan ecosystem is entering a new phase where growth and granular risk intelligence are both crucial. Digital platforms now leverage bureau data, behavioural analytics, and real-time monitoring to adjust lending strategies."
Sachin Seth, Chairman of CRIF High Mark and Regional Managing Director for CRIF India and South Asia, added: "The credit ecosystem shows resilience and discipline. We are seeing healthy demand for home, auto, and gold loans, as well as improved credit card outstanding balances with strong performance metrics across lenders."
The report reaffirms that India's retail credit cycle remains stable, driven by the ongoing shift toward secured lending and responsible underwriting practices. The findings provide valuable insights for policymakers and financial institutions navigating the evolving credit landscape.
