Retail loan disbursals rise 40%, gold products driving growth: Report

'Credit market witnessing rare alignment of accelerated growth and improving asset quality', it says

Retail loan disbursals grew 40 per cent in December 2025 from the year before, signalling strong credit demand as asset quality across major segments improved, said a report by Equifax India on Friday.

 

The consumer credit market is expanding rapidly, supported by better underwriting standards and a shift towards secured loans, said the financial consultancy company. Its report did not give the value of retail loan disbursals.

 

Gold, fastest-growing loan segment

 

Gold loans are the primary driver of retail lending. Disbursals in this category jumped 94 per cent, reaching about Rs 8.16 trillion in October–December 2025.

 

Equifax said lenders favour secured lending products, particularly those backed by gold, as they carry lower credit risk compared with unsecured borrowing.

 

 

Non-banking financial companies recorded the sharpest expansion in gold lending, with disbursals rising 189 per cent in December 2025. Public sector banks retained the largest market share at 46 per cent.

 

Another notable trend is the rise in higher-value loans. Gold loans of more than Rs 200,000 saw the fastest growth, indicating that borrowers are increasingly using such credit for large funding needs.

 

Personal loans rebound strongly

After a period of moderation, personal loan disbursals grew about 34 per cent year-on-year. Public sector banks led this recovery with growth of 42 per cent, almost double the pace recorded by private banks.

 

The report pointed to a “flight to quality”, with lenders focusing more on high-credit-score borrowers. Loans above Rs 10,00,000 now account for 37 per cent of disbursals in the segment, reflecting stronger participation from higher-income borrowers.

 

Asset quality improves

 

Despite the sharp growth in lending, asset quality indicators have improved across major loan categories.

 

Personal loan slippages declined to 0.65 per cent in December 2025 from 0.86 per cent the year before.

 

Home loan slippages improved slightly to 0.15 per cent from 0.16 per cent.

 

Net 90+ day delinquency levels have stabilised or declined across most products.

 

More than 85 per cent of the outstanding loan portfolio is concentrated among prime and super-prime borrowers with credit scores above 700, indicating stronger borrower quality.

 

“India's retail credit market is witnessing a rare alignment of accelerated growth and improving asset quality,” said Aditya B Chatterjee, managing director of Equifax India. “The strong pivot toward secured assets, particularly gold loans, reflects a deliberate industry shift toward resilience and capital preservation.”

 

What borrowers should watch

While the overall credit environment remains healthy, the report urged lenders and borrowers to watch for early signs of rising leverage as credit expands rapidly. For consumers, this means borrowing responsibly and maintaining strong credit profiles as lenders increasingly prioritise lower-risk borrowers.