India's consumption credit market displayed early signs of recovery in the first half of FY26, though credit card issuance remained a significant outlier with sharp declines, according to a comprehensive analysis by JM Financial Institutional Securities.

Credit Card Segment Faces Sharp Decline

The credit card segment witnessed a notable slowdown in new issuances, contrasting sharply with recovery trends in other consumption credit categories. The data revealed concerning metrics for the credit card industry during the September quarter of FY26.

Asset quality trends in credit cards showed mixed signals, with early delinquencies improving through a 40 basis point sequential decline in PAR 1–30. However, stress in the PAR 31–90 bucket increased for private banks compared with FY25 levels, indicating persistent risks in portions of the unsecured borrower base.

Personal Loans and Consumer Durables Show Strong Recovery

In stark contrast to credit cards, personal loans demonstrated robust recovery momentum. The segment reversed its FY25 decline with impressive growth figures across multiple timeframes.

Public sector banks led the personal loan recovery, supported by a sharp increase in average ticket sizes, while asset quality improved across lenders and borrower categories. Consumer durable loans also rebounded significantly, with private banks regaining market share in this segment, though asset quality trends remained mixed with rising longer-tenure delinquencies despite improvement in early buckets.

Secured Lending Segments Show Steady Growth

The secured lending landscape demonstrated consistent improvement, with public sector banks gaining substantial market share across key segments. Home loan disbursements grew 11% in the first half of FY26, with PSBs accounting for half of origination value.

Growth patterns skewed towards higher-ticket loans, reflecting rising residential property prices, while smaller ticket segments showed early signs of stress. Auto loans and two-wheeler loans recorded modest improvement in disbursement growth, though asset quality weakened in auto loans, particularly for NBFCs and lower ticket sizes.

Lenders Adopt Cautious Approach to New Borrowers

The report identified a broad-based decline in new-to-credit (NTC) borrower share across segments, especially in personal loans, two-wheelers and consumer durables. This trend indicates lenders are prioritising seasoned borrowers amid concerns around unsecured credit quality.

Early delinquencies have either improved or remained stable across most segments, except auto loans driven by NBFCs, with cautious underwriting remaining evident across the industry. The overall disbursement growth across consumption segments ranged between 6% and 35% year-on-year in the September quarter of FY26, compared with contraction or low single-digit growth during FY25.

Market Outlook and Investment Preferences

JM Financial noted that this recovery trend could support loan growth in FY27 if current patterns sustain. The brokerage maintains a selective approach on financial stocks, expressing preference for specific institutions across different categories:

Preferred Banking Stocks:

• ICICI Bank
• Axis Bank
• SBI
• City Union Bank
• DCB Bank

Preferred NBFC and HFC Stocks:

• Aditya Birla Capital
• Shriram Housing Finance
• PNB Housing Finance
• Aadhar Housing Finance

JM Financial Limited , a prominent player in India's financial services sector, has been assigned an Environmental, Social, and Governance (ESG) score of 73.8 by SES ESG Research Private Limited, a SEBI-registered ESG Rating Provider. This score, which translates to a Grade B+, was based on data from the fiscal year 2024-25.

Key Points of the ESG Rating

Unsolicited Rating Process

It's important to note that this ESG rating was not solicited by JM Financial. SES ESG Research independently assessed the company using publicly available information, without any direct engagement from JM Financial. This approach highlights the growing importance of ESG factors in the financial sector, even when companies do not actively seek such ratings.

Disclosure and Transparency

In line with regulatory requirements, JM Financial promptly disclosed this information to the stock exchanges. The company's disclosure, dated December 9, 2025, was made in compliance with Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements (LODR) and the SEBI Master Circular dated November 11, 2024.

Implications for Investors

The B+ grade suggests a relatively strong ESG performance. However, investors should consider that:

1. The rating was unsolicited and based solely on public information.
2. ESG ratings can vary between different rating providers due to methodological differences.
3. This score provides an additional metric for assessing JM Financial's overall corporate performance and sustainability practices.

As ESG factors continue to gain prominence in investment decisions, such ratings offer insights into a company's non-financial performance and long-term sustainability outlook.