Banks opting to lend to prime customers

Mumbai: Banks are increasingly giving loans to borrowers rated prime and above, latest data from an assessor focused on individual credit showed, indicating risk aversion among lenders at a time when job expansions at corporate India have become rather tentative amid an AI-led onslaught on repetitive tasks.Data from credit bureau TransUnion CIBIL showed that the bulk of new loan originations are concentrated among borrowers with a CIBIL score of 730 and above. The shift away from riskier segments is also evident in the declining share of new-to-credit customers, whose proportion of total originations has fallen sharply to 16% in January 2026 from 22% two years ago."The industry's preference for prime and above has gone up and at the same time, the industry is preferring existing-to-credit customers," said Bhavesh Jain, MD and CEO, TransUnion CIBIL. "The industry is preferring higher ticket size loans. Within existing credit also, we have seen an increasing trend where lenders are preferring existing-to-lender, or existing-to-bank or existing-to-NBFC, because the loan amounts are very high."Despite the cautious lending environment, overall credit market health has improved. TransUnion CIBIL's March 2026 Credit Market Indicator (CMI) rose to 102 for the quarter ended December 2025, up from 97 in the same quarter of the previous year. The improvement was driven largely by better asset quality, with balance-level 90-plus days past due (DPD) delinquencies improving across key product segments, pushing the CMI's performance sub-index up six points to 107 in December 2025 from 101 a year earlier.The sole area of stress was the micro-loan against property (LAP) segment, where balance-level 90-plus DPD delinquency rose 35 basis points year-on-year to 3.1% in December 2025 - though levels have remained broadly stable and range-bound since the previous quarter.On the supply side, the CMI rose to 98 in the December 2025 quarter from 91 in the December 2024 quarter, propelled by a surge in gold loan volumes and values. Rising gold prices have encouraged consumers to avail higher-ticket gold loans, with the average gold loan ticket size growing 1.8 times since March 2023. The indexed growth in average gold loan ticket size touched 189 points in the December 2025 quarter, compared to 132 in the same quarter of the previous year, with the average ticket size for the three months ended December 2025 standing at ₹1.9 lakh.Gold loans now account for the largest share of retail lending by both volume (36%) and value (39%) - more than a third of total retail loan supply - and in terms of outstanding balances, are now second only to housing loans.

from Economic Times https://ift.tt/tfWYL4d