Hello everyone,  

Welcome to the 188th edition of The Pattern. As always, let’s get into what’s shaping finance, technology, and the economy this week. 

When banks talk about growth, the number everyone focuses on is simple: how fast loans are rising. 

But that single number hides two things that matter just as much -- who is borrowing, and what kind of credit is growing the fastest. And right now, those details are starting to matter more than the growth rate itself. 

More borrowing is lifting profits 
Recent reporting suggests bank profits are likely to improve as rate cuts encourage more borrowing and push loan volumes higher. Lower interest rates  usually boost demand, and that’s showing up as stronger credit growth. This part of the cycle is fairly predictable. 

Where that growth is coming from 
At the same time, another set of data points deserves attention: a steady rise in unsecured lending, and growing concentration of both credit and deposits in a relatively small number of districts. 
 
Unsecured loans scale quickly. They don’t need collateral, paperwork is lighter, and approvals are faster. That makes them easier for lenders to grow and easier for borrowers to access. 

But there’s less room for error. If repayment behaviour shifts, losses surface faster and there’s no asset cushion to soften the blow. 

Geographical concentration adds another layer of sensitivity. When large parts of a loan book are tied to the same regions, local slowdowns don’t stay local for long. Even if overall loan growth looks healthy, exposure across the system becomes more uneven. 

Why stress isn’t showing up yet 
One reason this shift feels easy to miss is because asset quality still looks fine. Borrowers are paying, defaults are low, and balance sheets look clean. That’s typical when growth is steady and economic conditions are supportive. 

Risk usually builds in the background in this phase. It only becomes visible when growth slows, household incomes get tighter, or certain regions start feeling pressure. 

That’s why looking only at how much credit is growing can be misleading. The mix matters. 

A different kind of risk profile 
What stands out in this phase is the sharp rise in loans that aren’t backed by any collateral -- mostly personal and retail credit -- along with credit and deposits clustering in a small number of districts.

If pressure does show up, it’s unlikely to come from a handful of large accounts. It would come from many smaller borrowers, shaped by job trends, household cash flows, and local business conditions. 

It won’t be dramatic, but I suspect it will be harder to contain. 

What this moment is telling us 
In banking, stability only really gets tested when growth slows or some parts of the economy hit a rough patch. So, watching where credit is flowing (and how concentrated it becomes) starts to matter more than profit numbers alone. 

 
Reading list 

• India’s next credit reform 

• RBI is easing, but India’s long-term rates tell a different story 

• India's UPI miracle has a money problem; can Budget 2026 fix it? 

• When intelligence meets infra: Why India’s fintech surge needs a security backbone 

That’s all for this week. See you next time!  

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Cheers,
Mayank