Pre-budget expectations for loans 2026: What lenders want from FM Sitharaman

Finance Minister Nirmala Sitharaman will table the Union Budget 2026 on February 1. While most headlines would chase tax slabs and deductions (if any), participants of India’s credit ecosystem would be looking for something more powerful: how the Budget shapes the next era of lending across personal loans, gold loans, mortgages, MSMEs, and digital credit.

Because here’s the truth: credit is no longer a luxury product. It’s how millions of Indians manage cash flow, emergencies, aspirations, and even basic household stability. And in 2026, one of the key questions is this: Will India’s credit growth become healthier and wider or simply faster?

Why ‘credit reforms’ could be the silent blockbuster of Budget 2026

India has seen a sharp expansion in consumer lending, especially EMIs, short-tenure personal loans, and app-led credit. But policymakers now need to walk a tightrope:

• Credit should remain accessible
• But predatory lending and mis-selling must be reduced
• Borrowers must understand their credit scores
• Lenders must underwrite responsibly
• And rural/semi-urban credit needs an easier flow

In short: more credit, but better credit. This is exactly where Budget 2026 expectations are converging.

Responsible lending + Credit infrastructure

Vivek Singh, CEO, Home Credit India, sees the Indian credit market evolving fast, and wants Budget 2026 to deepen the guardrails that make credit safe and empowering, especially for everyday borrowers.

“India’s credit landscape is steadily maturing, with personal loans, EMI-led products, loan against property, two-wheeler loans, etc, playing an increasingly important role in supporting both essential needs and personal aspirations. As we look ahead to the 2026 Union Budget, we hope to see sustained focus on measures that strengthen responsible lending, through enhanced financial literacy initiatives, stronger transparency frameworks, and continued investment in advanced credit infrastructure. Such steps can further empower consumers to access credit with confidence and clarity. The 2025 Budget’s emphasis on boosting consumption, strengthening digital public infrastructure, and advancing financial inclusion has already created a strong foundation for financial institutions focusing on consumer needs. Building on this momentum, the upcoming Budget can help credit evolve into a powerful enabler of financial independence and everyday resilience for Indian households,” says Singh.

What this really means is: Budget 2026 can push the next phase of lending reforms beyond speed and scale, into trust and sustainability.

Gold loans

Gold loans have quietly become one of India’s most important household credit lifelines, especially outside metros.

George Alexander Muthoot, MD, The Muthoot Group, is pushing for two bold moves: a) Priority Sector Lending status for gold loan NBFCs and b) Digital innovation through gold-linked credit via UPI.

“Recognising the role of gold loan NBFCs through measures such as Priority Sector Lending status would help create a more level playing field, reduce the cost of funds, and enable wider outreach in semi-urban and rural India. For many households, small traders, and micro-entrepreneurs, a gold loan is frequently their first interaction with institutional finance. Further, enabling digital innovations such as gold-linked credit lines through UPI can provide first-time borrowers with instant, need-based liquidity at significantly lower costs than unsecured alternatives, while helping them build a formal credit history. Such forward-looking reforms can support near-term consumption and entrepreneurship, while strengthening long-term financial inclusion and resilience among India’s first-time borrowers,” says Muthoot.

If Budget 2026 delivers anything in this direction, it could create a new category altogether: instant secured micro-credit at scale, with much lower borrower risk.

Digital lending rules

India has already taken steps to clean up digital lending, but friction still exists, particularly around transparency, credit awareness, and underwriting quality.

Mukesh Pandey, Director of Rupyaa Paisa, expects Budget 2026 to shape a more structured policy environment for fintech-led lending:

“We expect that, as a result of Budget 2026, the Government of India would put into effect new Regulations that will enhance the digital lending experience, facilitate responsible lending via personal loans and credit cards, and build more awareness of credit scores and the underlying factors across Bharat. Additionally, creating incentives to promote data-driven underwriting will allow lenders to safely and profitably lend to first-time borrowers without requiring increased risk. Ultimately, the Budget 2026 framework should incentivise disciplined borrowing and increase financial literacy so that credit can be a positive tool for economic development rather than a liability,” says Pandey.

This is an important point: India doesn’t just need more lending apps, it needs better lending outcomes.

Secured + Asset-backed lending

When governments talk about economic resilience, the most reliable route is not ultra-fast unsecured credit. It’s a productive secured credit.

Sarvajit Singh Samra, MD & CEO, Capital Small Finance Bank, wants a targeted Budget push:

“A focused, sector-led push anchored in agriculture, MSMEs, and mortgages can create a strong multiplier effect by expanding asset-backed lending, improving rural and semi-urban incomes, and reinforcing inclusive growth. Budget 2026 can play a constructive role in enabling this by aligning policy incentives with sustainable credit outcomes, thereby supporting long-term economic resilience,” says Samra.

Fintech lenders

Fintechs aren’t just apps anymore. They’re becoming distribution engines for financial inclusion, especially for thin-file borrowers.

Vishal Bhatia, CFO, FincFriends, highlights the core bottleneck: cost of capital and clarity.

“To encourage lending by fintech lenders, the government could consider measures that improve access to low-cost and stable funding for regulated fintechs that are actively supporting financial inclusion. This could include expanding credit guarantee schemes, encouraging co-lending frameworks with banks and NBFCs, and providing regulatory clarity for digital lending models,” says Bhatia.

What India may realistically see in Budget 2026

If you zoom out, the loudest pre-budget theme emerging is:

“Expand credit, but reduce harm.”

So the most likely Budget 2026 announcements (or policy nudges) in loans/credit could include:

• Bigger financial literacy pushes (credit score awareness, borrowing discipline)
• Cleaner digital lending rules focused on transparency and borrower protection
• Support for credit infrastructure (data systems, underwriting rails)
• Co-lending encouragement between banks/NBFCs/regulated fintechs
• Secured lending innovation (especially gold loans + MSME asset-backed lending)
• Policy push toward inclusion + rural credit reach.

Disclaimer: MintMoney has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. MintMoney does not promote or encourage taking credit, as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.