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India's New Borrowers Flock to Consumer Loans
15 Sep
Summary
- Consumer durable loans are the main entry point for new borrowers.
- Credit access expands beyond major cities to smaller locations.
- India's retail credit portfolio saw 19.2% year-on-year growth.
Consumer durable loans are emerging as the primary gateway for new-to-credit customers in India, facilitating entry into institutional borrowing. These consumption-related loans accounted for approximately 46% of originations for first-time borrowers in the first quarter of the fiscal year. This trend is bolstered by the expansion of digital lending platforms and retailer partnerships.
Gold loans, with an 18.3% share, and microfinance are also significant contributors to extending credit access to previously unbanked populations. Microfinance institutions are actively increasing their engagement with first-time borrowers. This enhanced credit penetration is not confined to major metropolitan areas; it is steadily expanding into smaller cities and towns.
India's overall retail credit portfolio witnessed robust year-on-year expansion, growing by 19.2% to reach ₹179 lakh crore in the June quarter. Gold loans saw the highest surge at 62.2%, followed by consumer durable loans at 36.6%. This widespread increase in credit access signifies a significant stride towards greater financial inclusion across the nation.
