Consumption-Led Credit Product Delinquencies Continued to Steady During January to March Quarter

• Retail credit market demand moderated, with a marginal increase in supply during the January-March 2025 quarter
• Loan originations shifted towards high-ticket segments of home and two-wheeler loan categories
• Credit performance for consumption-led credit products such as personal loans, consumer durable loans and credit cards showed signs of stabilization quarter-over-quarter from Sept 2024 onwards

Mumbai, India, 23 June 2025 – India’s retail credit market continued to see a softening in the last quarter of the 2024–25 financial year as new loan originations (partly a measure of credit demand and partly a measure of supply) grew at a slower rate of 5% year-over-year (YoY) in March 2025, compared to 12% in March 2024. This and other factors pushed the Credit Market Indicator¹ (CMI) to a two-year low of 97, according to TransUnion CIBIL’s June 2025 Credit Market Report. A higher CMI reading indicates improving credit market health, while a lower reading indicates a decline.

Chart 1: Credit Market Indicator (CMI) March 2022-March 2025

The muted demand was more pronounced among consumers 35 years old or younger. 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. However, signs of improving credit performance emerged, particularly through consistent month-over-month declines in credit card delinquencies from January to March 2025.

“The slowing down of credit demand, especially among younger borrowers, is reflected in the easing in demand for consumption loans, which is typically the choice of products for younger borrowers. At the same time, a stabilization in delinquencies for personal loans and credit cards, while still an emerging trend, is positive and reflects improved repayment behavior, supported by continued financial literacy efforts and responsible lending practices,” said Mr. Bhavesh Jain, MD and CEO, TransUnion CIBIL.

Shift in Borrower Profile in Demand

The CMI for demand, reflecting consumers applying for new credit, continued to show a downward trend, falling to 92 in March 2025, from 95 in March 2024.

Chart 2: CMI Demand

The slowing of credit demand from younger consumers was evident from the fall in the share of enquiries from those aged 35 years or younger to 56% for the quarter ending March 2025, down from 58% in the quarter ending March 2024.

Chart 3: Enquiry Volumes by Consumer Age (3M Ended Period)

Credit demand in rural and semi-urban areas seemed to have weathered the demand moderation better. Enquiry volumes in rural areas and semi-urban areas increased to 52% for the quarter ending March 2025, from 49% for the quarter ending March 2024. In contrast, enquiry volumes in urban areas and metro areas dipped to 48% for the quarter ending March 2025, down from 51% for the quarter ending March 2024.

Chart 4: Enquiry Volumes by City Tier (3M Ended Period)

"Interestingly, while there's a slowdown in credit growth in urban and metro regions, rural and semi-urban areas are emerging as resilient growth engines. The increase in the share of enquiries in these regions suggests that financial inclusion efforts are beginning to bear fruit. This shift is not just geographic — it’s behavioral. The challenge now is to align credit products with the nuanced needs of these emerging segments,” said Mr. Jain.

Marginal Increase in Credit Supply with a Shift Towards Higher-Ticket Loans

The CMI for supply, which reflects the level and product mix of consumers opening new credit accounts, increased marginally to 93 during the quarter ending March 2025 from 92 in the quarter ending March 2024. This growth in supply has come with a shift towards high-end underlying assets for home loan and two-wheeler loan categories as seen from the increase in high-value loans for these categories. Also, across all other loan products, with the exception of personal loans, the growth in volume was lower than the growth in value, which indicates a preference for higher value loans.

Table 1: YoY Growth in Originations (3M Ended March 2025)

*Average new loan ticket size

The increases in the share of high-ticket home and two-wheeler loans indicates a preference among lenders for loans backed with high-value assets. Home loans above Rs 1 crore grew 9% year-over-year (YoY) during the quarter ending March 2025, compared to a negative growth of -7% YoY for the entire home loan segment during the quarter. Similarly, two-wheeler loans above Rs 1.5 lakh grew 7% YoY during the quarter ending March 2025, compared to a negative growth of -1% YoY during the quarter.

Slower growth in personal and consumer durable loans impacts NTC consumers since these are often the products of choice for those foraying into the formal credit ecosystem for the first time. Consequently, the share of originations by NTC consumers dropped by three percentage points to 16% during this quarter.

“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. Ensuring high credit quality through robust assessment of borrowers’ eligibility and creditworthiness is critical — not just for portfolio health, but for building long-term trust in the credit ecosystem. As lending rates may correct following repo rate cuts by the Reserve Bank of India, we are likely to see improvement in credit supply for the home loan segment in particular,’’ Mr. Jain said.

Delinquencies Improved Across Key Product Segments

Balance-level delinquencies² improved for consumption-led credit products on a quarter-over-quarter (QoQ) basis, indicating the easing of stress levels in these loan segments. The 90+ days past due balance level delinquency rate for credit cards stabilized at 2.00% as of March 2025, against 2.04% as of December 2024 and 2.02% as of September 2024, marking the first QoQ improvement in the past four quarters. Similarly, the delinquency rate for personal loans was at 1.14% as of March 2025, against 1.34% as of December 2024 and 1.37% as of September 2024.

Chart 5: Balance-level 90+DPD

“The improvement in delinquency rates collectively suggest stronger borrower profiles, reflecting improved consumer financial discipline and lender risk management,” Mr. Jain said.

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1. The TransUnion CIBIL Credit Market Indicator (CMI) is an evolving model which is regularly reviewed to ensure the most relevant variables and their relative weighting are selected to best chart the credit health of India’s lending market. When selecting certain variables, year-on-year movements are analysed to remove the effects of seasonality. The CMI is not a stationary index; hence the level in itself is not indicative of credit health. The CMI number needs to be looked at in relation to the previous period(s) and not in isolation. A lower CMI number compared to the prior period represents a decline in relative credit health, while a higher number reflects an improvement.

2. Delinquency rates are measured as percentage of balances in 90 to 719 days past due respectively for home loan, property loan; and 90 to 179 days past due respectively for personal loan, consumer durable loans, credit cards, auto loan and two-wheeler loan. It excludes Asset Reconstruction Companies.

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Disclaimer: This Information above is based on the TransUnion CIBIL Credit Market Indicator Report of March 2025. TransUnion CIBIL does not guarantee the adequacy or completeness of the information and/or its suitability for any specific purpose. TransUnion CIBIL shall not be responsible for any reliance on the Information. The reader should carry out all the necessary analysis that is prudent in their opinion before making any decisions.

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