Retail Loan Growth Falls Sharply

Mumbai, Jun 23 (PTI) Growth in retail loan originations fell to 5 per cent in the fourth quarter of FY25, largely as younger borrowers refrained from credit, a credit information company said on Friday.

The retail credit originations growth had stood at 12 per cent in the year-ago period, the report by Transunion Cibil said.

The CIC (credit information company) said a bulk of the slowdown in growth is due to the consumption loans segment like consumer durable loans and credit cards, and added that those under 35 years of age, especially ones living in metros and urban areas, are not borrowing as much.

In late 2023, the RBI had imposed measures to check the high growth in the riskier unsecured loan segment, which has had the desired objective of moderating growth in credit cards and personal loans segment.

Cibil said the credit card origination volumes degrew 32 per cent as against 0 per cent in the year-ago period, while the growth for personal loan was 6 per cent as against 13 per cent last year, and consumer durable loans rose by 6 per cent as against 19 per cent.

Growth in credit active consumers declined to 8 per cent from the year-ago period's 15 per cent, the report said.


The muted demand was more pronounced among consumers aged 35 years or younger, the CIC said, adding that this resulted in a 3 percentage point decrease in the new to credit (NTC) originations to 16 per cent.

Consequently, the share of New-to-Credit (NTC) consumers that lenders supplied decreased by three percentage points during the same period, given that a large share of younger consumers constitute the NTC segment.

"A decline in the pace at which NTC consumers are granted access to the financial system is concerning, as a healthy share of these borrowers is essential for continued efforts of deepening financial inclusion when large sections of our population remain outside the formal credit system," the company's managing director and chief executive Bhavesh Jain said.

On the home loans front, the overall originations volume de-grew 7 per cent in Q4FY25 as against a 5 per cent growth in the year-ago period. However, the CIC said the volumes for loans above Rs 1 crore jumped 9 per cent, illustrating lender preferences to write bigger loans.

Similarly, in auto loans as well, there was a higher preference to write bigger loans, the CIC said.

Share of rural areas in the overall enquiry volumes grew to 22 per cent in March 2025 from 20 per cent in the year ago period, while the same for semi-urban was up by a percentage point to 30 per cent, it said, adding that both urban and metro areas witnessed declines.

From an asset quality perspective, there was an improvement in the loans unpaid for over 90 days in all the segments, except credit cards which showed a 0.28 per cent increase to 2 per cent.