Car and Two-Wheeler Loan Originations Decrease in Q4 Following GST Rate Reduction, Gold Loans Experience Significant Growth: Report
Credit Market Report Suggests Volatility in Auto and Two-Wheeler Loan Originations
A recent report by Crif High Mark, a credit information company, has revealed a sharp decline in auto and two-wheeler loan originations by value in the January-March period. This decline comes after a jump experienced in the preceding December quarter.
According to the report, auto loan originations declined by 11.6 per cent to Rs 1.05 lakh crore during the March quarter, while the same for two-wheeler loan originations by value declined by a much sharper 22 per cent to Rs 29,800 crore during the quarter.
| Category | Q3 FY26 | Q4 FY26 | % Change |
|---|---|---|---|
| Auto Loans | Rs 1.18 lakh crore | Rs 1.05 lakh crore | -11.6% |
| Two-Wheeler Loans | Rs 27,400 crore | Rs 29,800 crore | 8.6% |
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The decline in auto and two-wheeler loan originations can be attributed to the normalisation of demand following the GST rationalisation and the subsequent surge in demand in Q3 FY26. Additionally, festivities in Q3 FY26 may have also contributed to higher demand.
From a portfolio perspective, auto loans grew 3.4 per cent during Q4 versus the preceding quarter, while two-wheeler loans were up by 2.7 per cent on a sequential basis.
The overall retail loans in the system grew 16.6 per cent to Rs 170 lakh crore in FY26, while the quantum of stressed advances also reduced in the last fiscal. The data also showed that only 2.7 per cent of retail loans across categories are unpaid for between 31 and 180 days as of March 31, 2026, against 3.1 per cent in the year-ago period.
The home loan portfolio at the system level grew by under 10 per cent in FY26, while gold loans jumped by 50.4 per cent in the fiscal year as lenders grew more confident of lending against the commodity, witnessing a rise in prices. Amid concerns over possible reverses in gold loan asset quality, the data showed an improvement in the quantum of assets unpaid for 31-180 days at 1.2 per cent as of March against 2 per cent in the year-ago period.
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Investor Takeaway
Auto and two-wheeler loan originations may experience a decline due to GST rate reduction.
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