As rates eased and embedded finance went mainstream, Indian households became more selective, more digital, and more disciplined with credit.

If 2024 was about restraint, 2025 was about intention.

“Across lending categories, we saw a clear shift toward purposeful, higher-ticket credit,” says Yashoraj Tyagi, CEO, CASHe. “Borrowers weren’t chasing easy money. They were making deliberate decisions tied to real needs.”

Housing set the tone. Home loan originations rose sharply, with nearly 40 percent of volumes coming from loans above Rs 75 lakh. According to Tyagi, this wasn’t just about affordability improving. “It reflects rising income confidence and a willingness to commit to long-term assets, not speculative buying.”

Auto loans followed a similar pattern. Volumes recovered, but growth was driven by larger ticket sizes and EV financing. “The EV story is important,” Tyagi notes. “Buyers are thinking beyond upfront cost and factoring in total ownership economics. That’s a sign of a more mature borrower mindset.”

Even personal loans evolved. While growth remained strong, demand skewed toward tickets above Rs 10 lakh, often used for consolidation, business needs, or meaningful life upgrades rather than discretionary spending. Borrowers in Tier 2 and emerging urban markets increasingly opted for shorter tenures and digital pre-approvals.

“What stood out was discipline,” Tyagi says. “People borrowed because they needed to, not because credit was easily available.”

That discipline showed up in asset quality. Despite tighter underwriting in unsecured credit, delinquencies remained stable. “Risk didn’t stay under control because lenders got aggressive,” he explains. “It stayed under control because borrowing stayed anchored to real transactions.”

A big structural shift behind this trend was embedded finance. In 2025, lending moved decisively closer to the point of need, inside property platforms, auto ecosystems, payroll systems, and commerce apps.

“Embedded finance is no longer a distribution experiment,” Tyagi says. “It’s becoming the default way credit is accessed. When loans are offered in context and backed by richer data, you improve both conversion quality and risk outcomes.”

Interest rates helped, but they didn’t distort behaviour. With cumulative rate cuts of 125 basis points, borrowing costs eased and EMIs fell, particularly in housing finance.

“Rate cuts didn’t suddenly create new borrowers,” Tyagi points out. “They improved feasibility. Fence-sitters moved forward, and some borrowers upgraded ticket sizes, but decisions stayed measured.”

Regulatory actions reinforced that tone, improving liquidity while pushing lenders to sharpen underwriting rather than reprice risk.

Looking ahead to 2026, Tyagi expects credit demand to remain strong, but access and pricing to evolve further. “Incomes are rising, aspirations are rising faster, and credit demand will grow. The difference is how credit is delivered and how risk is managed.”

He adds that early stress detection will rely less on static bureau scores and more on cash-flow and behavioural signals. “That’s how you scale without letting delinquencies creep up.”

For borrowers, his advice is straightforward. “Going into 2026, be intentional. Take credit for long-term value, not short-term wants. Clean up expensive debt, keep utilisation low, and protect your credit score.”

He sums it up simply: “In a changing rate cycle, discipline matters more than timing.”

2025 made one thing clear. India’s credit market isn’t just growing. It’s growing up.