Non-banking financial companies have significantly outpaced banks in retail lending segments during the first quarter of FY27, with the festive season further accelerating this trend. According to Reserve Bank of India data, NBFCs disbursed ₹13,413 crore in housing loans between March-end and May-end, compared to ₹13,072 crore by banks. The gap was even wider in vehicle and consumer durable segments, with NBFCs extending ₹13,840 crore and ₹9,991 crore respectively, while banks disbursed ₹9,772 crore and ₹944 crore during the same period. As reported by industry experts, retail loan growth has reportedly increased every month during the financial year up to August, reflecting healthy consumer demand and the festive season's impact on borrowing patterns.
The festive season is emerging as a major catalyst for personal loan growth, with banks and NBFCs launching aggressive campaigns to capture market share. According to industry analysts, personal loan demand is expected to remain strong throughout the festive months, as consumers increasingly finance purchases through flexible financing options. Many families are using this period to purchase electronics, vehicles, home appliances, travel, and festival-related expenses, with retailers offering large discount campaigns during these months. The combination of improving consumer confidence, recovering credit growth, and attractive lending schemes is encouraging more people to finance their purchases through personal loans, with banks offering lower interest rates, reduced processing fees, and flexible repayment options. Financial institutions believe the festive season, beginning with Raksha Bandhan and extending through Ganesh Chaturthi, Navratri, Dussehra, Diwali, Christmas, and New Year celebrations, has always been associated with increased spending, making it one of the busiest shopping periods of the year.
Despite NBFCs' strong performance in other segments, banks maintain a dominant position in gold loans. As reported by the RBI, bank gold loans increased by ₹52,908 crore so far this financial year up to May-end, while NBFCs could lend only ₹19,808 crore in the same period. This represents a significant gap in the traditionally high-yielding gold lending segment, where banks have maintained their leadership position throughout FY27. The gold loan market continues to be bank-dominated due to its high-yielding nature and the specialized expertise required for asset-backed lending.
While retail lending continues to outperform, banks are witnessing renewed demand from businesses as corporate borrowing shows signs of recovery. Corporate borrowing had slowed during earlier periods due to economic uncertainty and cautious investment decisions, but recent improvements in business confidence have encouraged companies to resume borrowing for expansion, infrastructure projects, manufacturing, and working capital. Industry experts say the recovery in corporate credit is a positive sign because balanced growth across retail and corporate lending strengthens the banking sector. Banks are therefore benefiting from increased activity across multiple customer categories, with the decline in retail loan share mainly due to the recovery in corporate borrowing rather than weakening retail demand.
Technology has significantly transformed the loan application process, enabling faster approvals and increased competition among lenders. Today, customers can apply for personal loans using mobile banking applications or online platforms without visiting bank branches, with digital verification systems processing applications much faster than before. Many eligible borrowers receive approvals within hours, contributing to rising demand among younger consumers who prefer paperless financial services. The festive season has become one of the most competitive periods for India's banking industry, with public sector banks, private banks, and NBFCs all competing to expand their retail loan portfolios through attractive offers and flexible repayment options. Banks continue investing heavily in digital platforms to improve customer experience, with financial institutions expecting borrowing to remain strong across several product categories including smartphones, laptops, televisions, smart home devices, refrigerators, air conditioners, washing machines, and vehicles. Despite increased competition, experts emphasize that responsible borrowing remains essential for maintaining healthy financial discipline during this period of heightened consumer activity.
