Indian Credit Macro — Mid-2026: The Peak Is Behind Us

Mosaic House View · June 2026

My read on where we are in the cycle — across ratings, banking, retail and consumer credit, real estate and promoter finance — and how I think we should underwrite through a year that is benign on the surface but no longer in its pink of health.

What I believe, in six lines

1. Peak credit macro is behind us. The cycle has not turned; it has simply stopped improving. Every momentum gauge has rolled over, yet the level it has rolled over from is still benign.
2. The deterioration is slow and the losses are not yet mounting. System bad loans sit near a multi-decade low and corporate leverage near a decade low, so the buffer is full and largely unspent.
3. Some losses will arrive this year. I do not see how a book can earn 15–17% in ‘performing credit’ and pretend that all of it is pure arbitrage rather than risk that simply has not printed yet.
4. I would not swap equity for credit merely because equity has not paid for two years. Credit is a different expression of risk, not a hiding place from it.
5. Two soft spots are building beneath a calm surface: a consumer-finance binge that has started again, which the regulator is for now choosing not to lean on; and IT-led property demand that is fading just as launches outrun sales.
6. So this is a year to be careful. Take less yield for a stronger balance sheet, fund what can be monetised quickly, and stop treating either the credit cycle or the equity-raising window as a law of nature.

Download the full note (PDF)

In this note

• The aggregate picture: the momentum has rolled over
• The banking system: asset quality at a multi-decade best
• Household and retail credit: the binge has started again
• Consumer finance and fintech: scorching again
• Microfinance: the one segment that already broke, and is healing
• Defaults so far: a few, scattered, and not yet systemic
• The equity-raising line: why ‘DRHP filed’ is not a credit hook
• Real estate: the goodness is fading, and IT is the swing factor
• Promoter finance: we are funding accessibility, not collateral
• Conclusion: a year to be careful