India’s banking and financial services sector is undergoing a significant shift, moving away from rapid expansion and towards a more measured approach focused on stability and profitability. Recent discussions at Antique Stock Broking’s 3rd Annual BFSI Conference 2025 in New Delhi highlighted this trend, revealing a sector prioritizing Indian BFSI growth through careful risk management and asset quality. This isn’t a slowdown, but a recalibration, driven by lessons learned and a desire for sustainable performance.
A Shift in Focus: Profitability and Asset Quality Take Center Stage
The overarching theme of the conference was a clear departure from the aggressive lending practices of the past. Banks are now demonstrably prioritizing asset quality and profitability over sheer volume of loans disbursed. This strategic pivot is a response to past challenges and a recognition that long-term success hinges on a healthy balance sheet.
Credit Demand: Stable but Segmented
While overall credit demand remains stable, it’s far from uniform. Lenders are seeing continued strength in secured retail lending – specifically home loans, loans against property, and gold loans – alongside sustained demand from the MSME (Micro, Small, and Medium Enterprises) sector. However, corporate lending and unsecured retail segments are still lagging, indicating a cautious approach from both borrowers and lenders in these areas. This selective demand reflects a broader economic landscape where certain sectors are recovering more quickly than others.
Faster processing times, enabled by digitization of loan origination and improved underwriting standards, are playing a crucial role in supporting this growth within the preferred segments. This efficiency is not just about speed; it’s about making better lending decisions.
Credit Cards and the Payments Landscape
The credit card market presents a mixed picture. Issuers reported healthy spending growth, a positive sign for consumer confidence. However, loan growth is moderating due to a combination of factors, including lower revolver rates and a significant decline in new card acquisitions – down by a substantial 50-60%. This slowdown in new card issuance suggests a saturation point or increased caution among potential applicants.
Meanwhile, the payments sector, particularly concerning UPI (Unified Payments Interface), is facing challenges related to monetization. Fintech and payments companies are actively seeking to diversify into higher-margin products to compensate for the low revenue generated from high UPI transaction volumes. Payment aggregators are witnessing a growing preference among merchants for integrated Point of Sale (POS) systems and cloud-based platforms, signaling a demand for more comprehensive financial solutions.
Navigating Asset Quality and Liability Management
A key takeaway from the conference was the stabilization of asset quality across the banking sector. Tighter underwriting standards, cohort-based risk recalibration, and improved collection efforts are all contributing to this positive trend. However, banks are realistic, acknowledging that a return to the exceptionally low credit costs seen in previous cycles is unlikely. The focus is now on maintaining a consistently healthy level of asset quality rather than striving for unsustainable lows.
On the liability side, banks are strategically shifting away from relying on large, often volatile, bulk deposits. Instead, they are focusing on building a granular CASA (Current Account Savings Account) base. This approach aims to protect net interest margins and ensure a more stable funding profile, crucial for weathering potential economic headwinds. This shift is a core component of the broader financial sector stability strategy.
NBFCs and Insurance: Adapting to the New Normal
Non-Banking Financial Companies (NBFCs) are mirroring the trend towards secured and risk-adjusted growth. Vehicle financiers are benefiting from continued policy support for tractors, while passenger vehicle financing has stabilized. Commercial vehicle financing, however, remains under pressure due to delayed payments and cash flow issues, rather than widespread defaults.
The insurance sector is also experiencing nuanced changes. Life insurers are reporting steady premium growth, driven by improved policy persistency, increased awareness of protection needs, and disciplined cost management. However, they are facing near-term margin pressures due to changes in Goods and Services Tax (GST) regulations. Non-life insurers are grappling with rising medical inflation, intense competition in motor insurance, and increasing distribution costs, emphasizing the need for pricing discipline and diversified distribution channels.
Microfinance and Digital Lending: Controlled Expansion
Microfinance institutions (MFIs) anticipate a more subdued growth rate of 5-10% over the next 1-2 years. This cautious outlook is driven by a focus on strengthening collections, diversifying their portfolios, and ensuring overall balance sheet stability.
Digital lenders and wallets are also prioritizing risk controls and operating leverage. While they remain committed to innovation and expanding access to credit, they are doing so with a greater emphasis on responsible lending practices and sustainable growth. This measured approach is vital for maintaining investor confidence and avoiding the pitfalls of unchecked expansion. The overall trend points towards a more responsible financial services regulation environment.
The Path Forward: Sustainable and Resilient Growth
The Antique Stock Broking BFSI Conference 2025 clearly demonstrated a sector-wide commitment to sustainable, risk-calibrated growth. Lenders and fintech companies alike are aligning their strategies around profitability, asset quality, and long-term resilience. This isn’t simply a reactive response to past challenges; it’s a proactive effort to build a stronger, more stable, and more inclusive financial system for the future.
The insights shared at the conference provide valuable guidance for investors, policymakers, and industry participants navigating the evolving landscape of Indian finance. To learn more about the specific trends impacting your area of interest within the BFSI sector, explore further analysis from Antique Stock Broking and other leading financial research firms.
