India’s young borrowers drive rise in consumption debt as RBI flags growing credit risks

New Delhi, August 11: India’s rising household debt is increasingly being driven by spending on lifestyle purchases rather than asset creation, with young borrowers leading the shift, prompting fresh concern among financial regulators.

 

 

Recent examples include two Mumbai teenagers who travelled to South Korea for a BTS concert using a credit card for much of the expense, and a young couple who reportedly fell into debt after overspending on a Thailand vacation.

 

According to Ministry of Finance data, non-housing retail loans, largely used for consumption, accounted for 58.4% of total household borrowings in March 2026, up from 54.9% a year earlier. Average outstanding debt per borrower has also risen sharply to Rs 4.78 lakh from Rs 3.41 lakh in 2018.

 

Personal borrowing has surged across categories. Loans against gold jewellery climbed to Rs 4.61 lakh crore from Rs 74,738 crore in 2022, while other personal loans nearly doubled to Rs 17.32 lakh crore.

 

The Reserve Bank of India has said financial system risks remain manageable but warned that rising household debt, particularly among lower-rated borrowers, requires close monitoring. Unsecured retail loans now show higher stress, with gross NPAs rising to 1.8%, while small-ticket personal loans under Rs 50,000 have recorded a 6.4% delinquency rate.

 

 

Credit bureau TransUnion CIBIL estimates that around 28% of India’s 890 million credit-eligible population is now credit-active, compared with just 11% a decade ago. Nearly half of these borrowers have consumption loans such as credit cards or personal loans, with Gen Z and millennials entering the credit system much earlier than previous generations.