India’s retail lending story is no longer just about buying homes—it is increasingly about funding lifestyles, aspirations, and consumption. A closer look at how personal loans are distributed across categories reveals a clear shift in how Indian households are using credit.
Data analysed by Client Associates (CA), a multi-family office, in its White Paper titled ‘The New Indian Household Balance Sheet’, shows that at the centre of this story is a familiar anchor: housing.
Housing loans continue to dominate retail credit, accounting for 51% of total personal loans in FY2024. While this share has dipped slightly from 53.6% in FY2016, it remains by far the largest segment.
But beyond housing, the composition of borrowing is changing—and fast.
The rise of consumption-led credit
Sectoral deployment as a % of personal loans
National Statistical Office (NSO), RBI
Credit card usage, for instance, has nearly doubled its share—from 2.7% in FY2016 to 4.8% in FY2024—making it the fastest-growing segment, with a CAGR of 25.2% over the past decade. This reflects a behavioural shift: households are increasingly comfortable using short-term credit for everyday spending.
The share of other personal loans—a broad category that largely includes unsecured and consumption-driven borrowing—has risen sharply from 21.2% in FY2016 to 26.3% in FY2024. This makes it the second-largest segment, reflecting a steady increase in demand for flexible, non-collateralised credit.
In contrast, several traditional loan categories have either stagnated or declined.
Education loans have dropped from 4.9% to 2.2%, reflecting either lower demand or a shift in financing patterns
Advances against deposits have reduced from 4.8% to 2.3%, suggesting lower reliance on secured borrowing
Loans against shares and bonds remain negligible at around 0.2%, indicating limited use of financial assets as collateral
Vehicle loans, once a key consumption category, have remained relatively stable but slightly moderated—from 11% to 10.8%, after peaking during the pandemic years.
Meanwhile, newer segments like loans against gold jewellery, which were negligible earlier, saw a temporary rise post-2020 before stabilising at around 1.9%, reflecting their role as a short-term liquidity tool during uncertain periods.
Consumer durable loans, on the other hand, have shrunk significantly to just 0.4%, indicating that smaller-ticket purchases are increasingly being financed through credit cards or personal loans instead.
While housing continues to anchor long-term borrowing, the fastest growth is now coming from unsecured, consumption-led credit.
“Since FY2016, lenders have prioritised retail credit, initially due to weak corporate loan demand and later due to a change in household credit behaviour. The strengthening of bank balance sheets post-pandemic further supported this trend, as this enabled banks and NBFCs to aggressively expand personal loan portfolios, nearly doubling retail credit’s footprint from 10.1% of GDP in FY2016 to 18.1% in FY2025,” noted the report.
A key driver of this expansion is the rise of unsecured debt. Powered by fintech innovations like “Buy Now, Pay Later” (BNPL) and advanced underwriting tools.