* Two Mumbai-based teenage girls travelled with their mother to Busan, South Korea, to attend a concert of Korean boy band BTS in June, financing much of their spending through a credit card.
* A young couple travelled to Thailand for a vacation last year, spent well beyond their budget on credit cards, and have since then resorted to rotating money through third-party vendors to create artificial cash flow, according to a personal finance post on Reddit warning about funding small luxuries with debt.
While India’s household debt has surged in recent years, financial sector regulators are particularly concerned about the composition of that debt. Non-housing retail loans — largely used for consumption — now account for more than half of household borrowings, and have grown faster than housing, agriculture and business loans,a trend flagged in internal discussions among policymakers.
As of March 2026, non-housing retail loans—primarily the consumption segment—constituted 58.4% of households’ total borrowings, up from 54.9% of total household debt in March 2025. Average outstanding debt per borrower rose to Rs 4.78 lakh as of March-end 2025, from Rs 3.41 lakh as of March-end 2018, according to Ministry of Finance data.
The sharpest increases have come in some categories of personal borrowing. Outstanding loans against gold jewellery jumped to Rs 4.61 lakh crore as of March 2026 from Rs 74,738 crore in March 2022, while other personal loans’ outstanding stood at Rs 17.32 lakh crore as of March 2026 compared with Rs 9.02 lakh crore in March 2022, data shared in Parliament on Monday showed.
While the risks to the Indian financial system from household lending remain contained, the Reserve Bank of India (RBI) has flagged household debt accumulation, particularly among lower-rated borrowers, as requiring “close monitoring”. Gross NPA ratios stood at 0.7% in secured retail loans and 1.7% in unsecured retail loans at end-March 2026. The “exposure to these sectors requires close monitoring as risks to asset quality could increase, especially if overall economic conditions weaken due to the West Asia conflict and impact borrower cash flows”, the RBI had said in its latest Financial Stability Report.
Unsecured personal loans remain a particular vulnerability: In the small-ticket personal loan segment of less than Rs 50,000, fintech firms have gained a higher 56.8% market share, after strong 41.6% credit expansion, well above the overall segment growth of 20.1%. Delinquencies stood at 6.4% as of March 2026. About 70.5% of fintech loan books are unsecured, with roughly half of these loans extended to borrowers under 35.
According to the latest CIBIL TransUnion data, the share of India’s credit-eligible population that is credit-active has risen from 11% about a decade ago to around 28% now. Of the credit-eligible population of 890 million, close to one-third have, over the last year, taken a loan or have a loan running, or are paying EMIs or credit card bills.
Almost half of this credit-active population has a consumption loan—credit card, personal loan, or consumer durable loan—while nearly 10% have an entrepreneurial loan or business-oriented loan. The number of credit-active consumers with consumption loans and business loans grew fourfold and tenfold, respectively, between 2017 and 2024, TransUnion CIBIL data showed. Consumption borrowing has been driven substantially by younger consumers, including Gen Z, often with repayment tenures of less than three years.
“What we need to continuously monitor is that while encouraging credit growth, are we incentivising need-based credit. The other thing is the ability to pay, especially in certain segments such as younger borrowers where the leverage has gone up. In the case of consumption loans, for instance, the lender cannot be in a position to fully qualify income information and if on account of the increased leverage, the consumer is in a situation to pay or not,” an executive with a credit bureau said.
The share of over-leveraged consumers rose threefold — from 5% in FY17 to 18% in FY24 — before easing marginally to 15% in FY26 after industry intervention, with excessive borrowing concentrated among younger consumers. Their share in the country’s credit-active base has increased from 33% in 2017 to 39% in 2026.
Even as unsecured retail lending has moderated — it forms 25% of retail loans and 8.3% of gross advances — its asset quality has weakened relative to the overall retail portfolio. Its gross non-performing asset (GNPA) ratio stood at 1.8% vis-à-vis 1.2% in March 2025, with stress particularly visible in private sector banks.
The trend suggests a growing propensity to incur debt for immediate consumption rather than asset creation. Outstanding credit card debt crossed Rs 3 lakh crore last fiscal, while delinquencies—payments overdue between 90 and 360 days—rose more than 40% year-on-year, according to data from CRIF High Mark, an RBI-registered credit bureau.
“The rising credit growth for consumption keeps coming up during discussions among policymakers and the banking sector. It especially drew concern during 2022 and 2023. Even now it is seen as a concern in terms of the rising numbers. But since the amounts involved are relatively smaller, the scale is still not being seen as worrisome,” an economist, who did not wish to be named, said.
Concerts, vacation travel
Music concerts over the last 24 months could have resulted in a spending push of Rs 1,600-2,000 crore, according to estimates by Bank of Baroda’s economists Dipanwita Mazumdar and Jahnavi Prabhakar. A significant share of concert-goers are Gen Z consumers, with spending in some cases supported by multiple credit cards.
Airbnb’s Experience-Led Travel Insights in January 2026 also highlighted the music-led trend among Gen Z. It found that 62% planned to travel around concerts and music festivals this year, while 76% said they had travelled to a city for the first time to attend such an event. Respondents spent Rs 51,000 on their most recent event-led trip. Six in 10 young travellers were willing to allocate 21-40% of their monthly income to music-led travel and experiences, while one in 10 was willing to spend as much as half.
Consumers are also increasingly using credit rather than savings to finance lifestyle purchases and experiences. Over 25% of personal loans taken in India during the first half of 2025 were for travel, according to a Muthoot Finance report. This reflects a broader shift towards a “live now, pay later” approach among millennials and Gen Z.
An analysis by Paisabazaar revealed how much earlier younger generations are entering the credit system. Consumers in the 1960s and 70s typically took their first loan in their late 30s or early 40s, often through secured loans like home or auto loans. Those born in the 1990s typically entered the credit ecosystem by their mid-20s through credit cards, personal loans or consumer durable loans.
For consumers born after 2000, the credit journey is beginning earlier still — often around age 22, through small-ticket loans and buy-now, pay-later products.
Of the credit-eligible population of 890 million, close to one-third have, over the last year, taken a loan or have a loan running, or are paying EMIs or credit card bills. 
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