India's lending landscape in FY25 has undergone a significant transformation, with lenders witnessing a rise in high-ticket loans even as overall origination value declined, according to the latest annual report from CRIF High Mark.
The report, 'How India Lends: FY25,' highlights a strategic recalibration by lenders, who are increasingly favouring larger loan sizes in response to evolving borrower preferences and heightened risk aversion.
Despite the uptick in high-ticket loans, the overall origination value in several segments has declined. For instance, personal loan originations dropped by 2.6% in value, and home loan origination growth slowed to 2.6% YoY, reflecting increased caution amid macroeconomic headwinds.
While origination values shifted toward higher-ticket loans of above Rs 75 lakh in the home loan segment and early stress indicators improved across lenders, small ticket loans below Rs 5 lakh continue to show elevated delinquency risks.
Microfinance lending saw a 13.9% YoY decline in Gross Loan Portfolio, with smaller ticket loans continuing to contract. Stress in the Rs 1-5 lakh segment was particularly pronounced, with both early and mid-stage delinquencies rising.
Meanwhile, auto loan growth moderated to 5.2% YoY, a sharp drop from previous years, as demand shifted towards higher-value vehicles. Two-wheeler loan growth also slowed, with subprime borrower stress and tighter credit norms contributing to increased delinquencies.
Consumer durable loan originations grew modestly by 3.3% in value, while credit card originations declined by 4.2% after two years of strong growth, signaling intensifying competition and shifting acquisition strategies.
Industry Insight
“FY25 was marked by recalibration and resilience across the credit ecosystem. As borrowers gravitated towards higher-ticket loans and lenders adapted to evolving risks, we saw a deliberate shift in strategies aimed at managing portfolio quality, while addressing market needs,” Sachin Seth, chairman of CRIF High Mark and Regional Managing Director for CRIF India and South Asia, said.
Overall, the report underscores a more cautious credit environment, with lenders recalibrating their strategies to focus on quality over quantity.
As the market continues to evolve, the shift towards high-ticket loans is expected to persist, the report said.
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