In 2025, India’s Non-Banking Financial Companies (NBFCs) are taking a sharp turn in their lending strategy. Once known for aggressively disbursing personal loans, NBFCs are now showing a strong preference for secured lending products such as gold loans, vehicle loans, and loan against property.
But what’s behind this sudden shift? Let’s break it down.
1. The Rising Risk in Unsecured Lending
Over the past few years, personal loans have grown rapidly — but so have default rates. Many NBFCs experienced repayment delays, especially in the aftermath of inflationary pressure and job market instability.
Unsecured loans, which don’t require any collateral, became riskier for lenders as credit demand outpaced borrowers’ repayment capacity.
As a result, NBFCs began tightening their underwriting norms and moving toward asset-backed lending, where the risk is better managed through collateral.
2. Regulatory Pressures and RBI Guidelines
The Reserve Bank of India (RBI) has also played a key role. With stricter risk-weight norms and revised capital adequacy guidelines, unsecured lending has become more expensive for NBFCs.
To maintain profitability while complying with regulations, many NBFCs are strategically rebalancing their portfolios toward secured segments like:
Loan Against Property (LAP)
Vehicle & Equipment Finance
Gold Loans
These products not only reduce credit risk but also offer better asset recovery in case of default.
3. Rising Demand for Secured Credit
Post-pandemic, Indian consumers and small businesses have become more financially aware. Rather than borrowing without collateral, they’re now comfortable pledging assets to get lower interest rates and higher loan amounts.
This shift in borrower behavior perfectly aligns with NBFCs’ preference for secured lending — creating a win-win situation.
4. Technology and Data-Driven Lending
Digital transformation is empowering NBFCs to assess risk more accurately in secured products.
AI-based valuation tools, real-time collateral tracking, and alternative credit scoring systems make it easier to process secured loans efficiently.
This technological edge ensures faster disbursement with reduced NPAs (Non-Performing Assets).
5. What It Means for Borrowers
If you’re planning to take a loan in 2025, expect:
Tighter screening for unsecured personal loans
Attractive offers on gold or property-backed loans
Competitive interest rates on secured products
Lower loan amounts or shorter tenures for unsecured loans
Borrowers with strong collateral will enjoy more favorable terms, while those without assets may find limited credit options outside of fintech platforms.
Conclusion
The lending landscape in India is evolving. NBFCs are no longer chasing rapid growth through unsecured personal loans — instead, they’re focusing on sustainable lending through secured products.
This strategic shift not only protects their balance sheets but also stabilizes the overall credit ecosystem.
As 2025 progresses, this trend is expected to reshape how Indians borrow — emphasizing security, stability, and smarter credit choices.
FAQs
Q1: Why are NBFCs reducing personal loan disbursements?
Because of rising default risks and RBI’s tightened norms, making unsecured lending costlier and riskier.
Q2: Which types of secured loans are NBFCs focusing on?
NBFCs are emphasizing gold loans, vehicle loans, and loans against property.
Q3: How does this shift affect borrowers?
Borrowers with assets benefit from lower interest rates, while unsecured borrowers may face stricter eligibility checks.
Q4: Is personal lending disappearing completely?
No, but it’s becoming more selective — focused on low-risk borrowers with high credit scores.
Published on : 31st October
Published by : SMITA
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