MUMBAI: Indicating the rising indebtedness of households, credit demand in India has been moving away from asset ownership to consumption-driven loans, data released by credit bureau Transunion CIBIL on Thursday showed.
As of March 2026, consumption is the largest sector for loans at 51%, up from 34% in March 2017. India’s overall retail loan size is estimated at over Rs 170 lakh crore.
According to RBI data, formal loan systems saw a significant surge in FY26, marking a revival in borrowing demand. Net incremental credit expanded by `44.6 lakh crore to `311 lakh crore. Of this, bank credit constituted `212 lakh crore and non-bank credit `99 lakh crore.
According to the latest report, vehicle loans among credit-active borrowers make up for the second largest category of credit at 18%.
The share of new-to-credit borrowers has gone down to 13% in FY26 from 32% in FY17. This indicates that the credit universe is maturing, with lenders concentrating on existing customers rather than first-time borrowers.
The report shows that credit behaviour among borrowers has changed dramatically, especially since the Covid pandemic, with credit moving from asset ownership such as homes towards consumption (consumer durables) and entrepreneurship.
“Consumer durable loans are the biggest growth drivers for the Gen Z universe. Now purchasing a mobile phone on credit is the most important factor for them. Prior to Covid, it was the two-wheeler,” said Bhavesh Jain, managing director of Transunion CIBIL.
Credit worthy
India’s overall retail loan size is estimated at over `170 lakh crore
Among credit-active borrowers, consumption loans make up for 51% of retail credit; vehicle loans come in second, at 18%
Unsecured biz loans rose to 21% in Mar 2026 from 4% in Mar 2017
Share of new borrowers in overall credit dropped to
13% in FY26 from 32% in FY17. This shows lenders focus on existing borrowers
