New Delhi, Feb 24 (NationPress) India's retail lending sector has witnessed a remarkable expansion, reaching Rs 162.7 lakh crore in the third quarter of FY26. This marks an impressive year-on-year increase of 18.1 percent, with a total of 690 million active loan accounts and a notable improvement in asset quality, according to a report released on Tuesday.

The analysis conducted by Credit bureau CRIF High Mark revealed that the Portfolio at Risk (PAR), which indicates repayments overdue by 31 to 180 days, has decreased to 3.1 percent from 3.6 percent in the same period last year. Additionally, quarterly loan originations surged by 41 percent YoY to reach Rs 25.3 lakh crore.

Gold loan originations experienced a staggering 90.3 percent YoY increase, fueled by the rising prices of gold. The rationalization of GST rates led to a quarter-on-quarter boost of 46.7 percent in two-wheeler originations and a 22.1 percent growth in auto loans. The festive season also provided a lift, driving consumer durables up by 14.7 percent sequentially, as noted in the report.

Furthermore, a trend of premiumization was observed across various categories, with the average ticket size for home loans increasing by 6.4 percent QoQ to Rs 33 lakh. Loans exceeding Rs 75 lakh constituted 40 percent of total originations, compared to 35 percent from the previous year.

Gold loans also reflected a similar premiumization trend, with loans above Rs 5 lakh accounting for 36.5 percent of the total value, up from 24 percent in Q3 FY25.

Non-Banking Financial Companies (NBFCs) strengthened their foothold in high-velocity segments, capturing 30.7 percent of gold loan origination value in Q3 FY26 and dominating 91.1 percent of personal loan volumes.

Public Sector Undertaking (PSU) banks continued to enhance their strategic positioning in secured lending, while private banks focused on home loan originations. PSU banks accounted for 50.3 percent of total originations, in contrast to 23.3 percent from private banks. They also maintained a significant presence in gold loan origination value, holding 45.8 percent, supported by improved digital capabilities and competitive pricing.

Growth was particularly pronounced in non-metro cities, especially for mass-market products like personal loans, two-wheelers, and consumer durables, signaling a deeper penetration into semi-urban and rural markets. This development indicates a growing accessibility to formal credit and an increase in borrower engagement beyond metropolitan areas, as highlighted in the report.

aar/pk