New Delhi [India], December 28 : India's banking and financial services sector is entering a phase of steady but selective growth, with lenders increasingly prioritising asset quality, profitability and risk calibration over aggressive expansion, according to discussions at Antique Stock Broking's 3rd Annual BFSI Conference 2025 this month.
Banks indicated that credit demand remains stable but skewed toward secured retail products such as home loans, MSME lending, gold loans and loans against property, while corporate and unsecured retail segments are yet to see a meaningful revival.
Faster turnaround times driven by digitised origination and improved underwriting are supporting growth.
Credit card issuers noted healthy spending growth, but loan growth is moderating due to lower revolver rates and a sharp slowdown in new card issuance, which has fallen by nearly 50-60 per cent.
On asset quality, banks highlighted that delinquencies have stabilised, aided by tighter underwriting, cohort-based risk recalibration and better collections.
However, management cautioned that a return to pre-cycle-low credit costs is unlikely.
On the liability side, banks are shifting focus toward granular CASA mobilisation instead of bulk deposits to protect margins and funding stability.
Across NBFCs, management commentary reflected a decisive shift toward secured and risk-adjusted growth.
Vehicle financiers reported sustained momentum in tractors, aided by policy support, while passenger vehicle demand has stabilised and commercial vehicles remain stressed due to delayed cash flows rather than structural defaults.
Housing finance players flagged rising demand for higher-ticket loans but acknowledged increasing competitive pressure from PSU banks benefiting from lower costs of funds.
Microfinance institutions expect subdued industry growth of 5-10 per cent over the next 1-2 years as lenders prioritise collections, portfolio diversification and balance sheet stability.
In insurance, life insurers reported steady premium growth supported by improved persistency, higher protection penetration and disciplined cost control, even as GST-related changes pose near-term margin headwinds.
Non-life insurers highlighted pressure from elevated medical inflation, intense competition in motor insurance and rising distribution costs, reinforcing the importance of pricing discipline and omni-channel distribution.
Meanwhile, fintech and payments players are pivoting toward higher-margin products to offset low monetisation of UPI volumes.
Payment aggregators emphasised the growing shift by merchants toward integrated POS and cloud-based platforms, while digital lenders and wallets are focusing on tighter risk controls, operating leverage and selective credit expansion.
Overall, the conference underscored a sector-wide transition toward sustainable, risk-calibrated growth, with lenders and fintechs alike aligning strategies around profitability, asset quality and long-term resilience, Antique Stock Broking said.
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