Banks are taking a balanced approach, extending more unsecured credit like personal loans and credit cards, and cautiously increasing lending to MSMEs. India’s RBI recently cut policy rates and lowered reserve requirements—moves intended to encourage lending, especially to small and mid-sized firms—but lenders are expected to focus more on retail credit and mortgages in the near term . Meanwhile, fintech NBFCs in India have surged ahead: they originated nearly 11 crore personal loans worth over ₹1 lakh crore in FY 2024‑25, reflecting a strong deepening of formal credit via digital platforms . Domestic banks are also ramping up unsecured portfolios, though with measured caution given improving asset quality .

In other regions, the picture is mixed: the Eurozone saw stagnating business lending in May despite interest rate cuts , while the UK’s high-street banks reported a ~30 % year‑on‑year jump in SME lending to firms with turnovers under £2 million in Q1 2025 .

Taken together, there’s solid momentum in personal and SME credit—spurred by policy support and fintech innovationeven as traditional banks proceed with measured prudence.

sources