With the Reserve Bank of India (RBI) warning of a softer growth outlook, L&T Finance places its confidence in personal and two-wheeler loans to sustain lending momentum in the second half of FY26.

Can small-ticket loans reshape India’s credit growth story? The latest quarterly updates from L&T Finance suggest they might. As per Financial Express (October 2025), Managing Director and CEO Sudipta Roy said that personal loans and two-wheeler (2W) finance will drive the company’s growth in H2 FY26.

This comes soon after RBI Governor Sanjay Malhotra, in his September 2025 policy statement, observed that the “growth outlook is softer and below expectations.” Yet, consumer lending, particularly in small-ticket categories, remains steady. L&T Finance seems ready to capture that demand by expanding both reach and product mix.

According to its Q2 FY26 report, personal loan disbursements grew 50% quarter-on-quarter, while two-wheeler loans increased 18%. These figures indicate a firm recovery in household credit appetite.

Personal Loan Growth In H2: The Core Strategy

Personal loans are expected to be the company’s main growth driver in the second half of FY26. L&T Finance plans to expand lending through digital channels and fintech collaborations, focusing on borrowers in the prime and near-prime segments.

As per the company’s quarterly filing with stock exchanges in September 2025, personal loans accounted for nearly 25% of retail disbursements, compared to 15% in 2024. The company expects 30%–35% growth in this category by March 2026.

Parameter	Performance (Q2 FY26)
Personal Loan Disbursement Growth	+50% QoQ
Targeted Growth (H2 FY26)**	+30–35%
RBI Retail Lending Growth (FY25)**	+22% YoY

The growth also reflects broader national trends. The RBI Credit Growth Report (June 2025) noted that personal loans rose 22% year-on-year, supported by rising demand for unsecured consumer credit.

L&T Finance uses an internal risk management platform called Cyclops to assess borrower quality. This helps maintain stable credit costs, projected at around 2% over the next four quarters.

Next, the company’s expansion into the mobility finance segment is expected to keep its rural engine running.

Two-Wheeler Finance Market Trends Show Strong Demand

The two-wheeler finance market is gaining pace again after two years of modest growth. In Q2 FY26, L&T Finance reported 18% growth in 2W loan disbursements, largely supported by rural and semi-urban customers.

Roy said during the October 2025 press briefing that the company will expand its 2W loan network across Tier-2 and Tier-3 cities. The plan aims to make financing more accessible in regions where traditional banking penetration remains limited.

Parameter	Growth / Data
Two-Wheeler Disbursement	+18% QoQ
Retail Loan Book	₹92,224 crore
Vehicle Registrations	+12.4% YoY

According to the Ministry of Road Transport and Highways’ Vehicle Registration Data (August 2025), India recorded a 12.4% rise in two-wheeler registrations. This trend shows that mobility finance is again gaining traction as rural consumption improves.

Such figures confirm that L&T Finance two-wheeler loans are aligned with national credit and consumption patterns.

Expanding Physical Network To Increase H2 Financial Growth

While digital platforms have become the core of lending operations, physical presence remains important. L&T Finance announced its plan to open 200 new branches by March 2026, including 50 multi-service “Sampoorna” branches offering personal, gold, and farm loans.

The company’s H2 financial growth personal loans plan focuses on states such as West Bengal, Odisha, Punjab, Haryana, Rajasthan, Gujarat, and Madhya Pradesh. Karnataka will see limited expansion as the only southern state in the current rollout.

L&T Finance Branch Expansion Plan (FY26)

Branch Type	Planned Count	Target Region
Total New Branches	200	Northern and Eastern India
Sampoorna Branches	50	Multi-product centres
Rural Branches	80	Semi-urban and rural clusters

The Ministry of Finance’s Quarterly Banking Report (Q2 FY25) stated that semi-urban credit demand grew 16% year-on-year, validating the company’s decision to target these geographies.

After completing the branch rollout, L&T Finance CEO Sudipta Roy expects retail assets to make up 80% of total AUM, marking a transition toward becoming a fully retail finance company within the next two to three quarters.

The next section explores how this development connects to broader sector policies and earlier coverage.

Linking To Broader Credit Policy Signals

This move follows what the RBI said in its July 2025 bulletin. The report showed that retail credit growth was slowing because of strict capital rules, but personal loans were still growing fast.

Earlier, an article titled “Retail Credit Growth Eases in Q1 FY26, Says RBI Bulletin” explained that many NBFCs had started giving more unsecured loans to balance weak corporate credit.

Now, L&T Finance is doing something similar. It is expanding both digital lending and branch banking to keep a balance between growth and safety. This plan may help the company grow while following the RBI’s warning about slower economic growth.

As LoansJagat reported in “Bank Credit to Industries Growth Falls to 7.6% in June, Says RBI”, industry lending is falling faster than retail loans. This shows that the RBI and banks need to focus more on small business and consumer credit.

Conclusion

The next two quarters will test if L&T Finance can sustain its growth amid tighter liquidity and a softer macroeconomic outlook. The company’s bet lies on expanding personal loan growth in H2 and increasing the share of two-wheeler finance market trends.

If credit demand continues to rise, it may reaffirm that India’s financial growth in FY26 is being powered not by big industries but by individual borrowers and small mobility dreams.

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