India’s preference for EMI (Equated Monthly Instalments) is reshaping consumer behaviour across both urban and rural markets. What was once seen as a tool for big-ticket purchases has now become a mainstream way to access credit, making everything from smartphones to homes more affordable and aspirational. The rise of digital lending and embedded finance has only accelerated this trend.
EMI Adoption and Consumer Preferences
- EMI Cards Lead the Way: More than half of Indian borrowers now prefer EMI cards over traditional credit cards or Buy Now, Pay Later (BNPL). Instant approvals, trust, and ease of use make EMI cards especially popular among Millennials and Gen Z in Tier-1 and Tier-2 cities.
- E-commerce Integration: Online platforms have made EMI conversion seamless. At checkout, consumers can split payments into instalments, often with festival offers, zero down payments, or no-cost EMI schemes.
- Housing Affordability: For home loans, the average EMI-to-income ratio nationally stood at 28% in H1 2025. In Mumbai, it reached 48%, while Ahmedabad remained the most affordable at 18%. This highlights the pressure of housing costs in metros versus smaller cities.
Market Growth and Key Sectors
- Consumer Lending Expansion: India’s consumer lending market is projected to grow 4.9% in 2025, reaching $724.2 billion. While this is slower than the 27.6% jump in 2023, Equated Monthly Instalments remains the preferred model for financing high-value purchases.
- Durables on the Rise: The consumer durable finance market stood at $1.67 billion in 2024 and is expected to grow to $4.73 billion by 2030. Rising demand for smartphones, electronics, and appliances—especially among urban families—fuels this surge.
- Credit-Linked EMI Growth: BNPL and EMI linkages with credit cards crossed ₹50,000 crore ($6+ billion) in annual transactions by 2024, supported by AI-driven underwriting and personalised offers from banks and fintechs.
Affordable Finance and Digital Innovation
- Fintech Inclusion: Digital lenders and neobanks are bringing EMI access to Tier-2 and Tier-3 cities with instant paperless approvals, wallet-linked EMI cards, and even WhatsApp-based loan journeys.
- Festival-Linked Boost: No-cost EMI schemes and cashback offers during shopping festivals have turned Equated Monthly Instalments into a lifestyle choice rather than just a financing tool.
- Policy Rate Support: Expected interest rate cuts in mid-2025 will reduce Equated Monthly Instalments burdens, especially for housing and long-tenure loans..
More Than a Payment Option
India’s growing reliance on EMIs shows how credit is evolving from being a financial backup to becoming a lifestyle enabler. Whether it’s buying a first home, upgrading to a premium smartphone, or furnishing an apartment, EMIs are giving consumers the flexibility to dream bigger and pay smarter.
The Equated Monthly Instalments culture is no longer just about affordability—it’s about empowerment, making aspirations achievable for millions of households across India.
