MUMBAI: India’s retail lending sector slowed notably in FY25, as a mix of economic headwinds, regulatory tightening, and shifting borrower behaviour led to a broad-based moderation in credit growth. According to CRIF High Mark’s annual How India Lends FY25 report, the deceleration was especially visible in home loans and personal loans, which have traditionally anchored the retail credit engine.Home loan originations rose by just 2.7% year-on-year, increasing by Rs 28,163 crore to Rs 10.7 lakh crore, a sharp fall from the 9.4% growth (Rs 97,978 crore) recorded in FY24. The slowdown was even starker in volume terms, with originations falling by 2 lakh to 34.7 lakh loans in FY25, compared to 36.6 lakh a year ago. High property prices and macroeconomic uncertainties dampened demand, although public sector banks managed to grow their market share, partially offsetting declines seen by private lenders.

The overall consumption loan market also showed signs of fatigue. Origination value growth fell to 10.0% in FY25 from 14.7% the previous year, while volume growth slipped marginally to 9.7% from 10.0%. This pullback was largely due to increased lender caution, tighter risk controls, and rising stress in unsecured credit categories.Personal loans were hit harder, with origination value declining by 2.9% or Rs 26,615 crore to Rs 8.8 lakh crore, down from Rs 9.1 lakh crore in FY24. While volumes rose to 14.6 crore loans, marking 8.3% growth over the previous year, this was a steep drop from the 26.9% surge in FY24. The increase in average ticket size masked slower borrower acquisition, as lenders turned risk-averse in the face of mounting delinquencies.Two-wheeler loans, once a fast-expanding segment, saw their growth halve. Origination value rose by 10.6% or Rs 10,513 crore to Rs 1.1 lakh crore, compared to 25.1% growth (Rs 20,019 crore) in FY24. Auto loans also lost momentum, with originations increasing by just 5.2% or Rs 17,692 crore to Rs 3.6 lakh crore in FY25. This marked a sharp drop from 15.3% growth in FY24 and a 37.6% rise in FY23. Normalised vehicle demand post-pandemic and a high base effect contributed to the cooling trend.Consumer durable loans recorded muted expansion, with originations rising 3.3% or Rs 5,144 crore to Rs 1.6 lakh crore, despite strong volume growth. Inflationary pressures and flat wage growth compressed ticket sizes, capping value growth. Credit card issuance, meanwhile, fell sharply by 26.4%, down 77.7 lakh cards to 2.2 crore from 2.9 crore lakh in FY24.