India’s borrowing story keeps evolving. The numbers show growth, but also a shift in how households borrow and manage credit.
The Big Picture: Credit Is Still Expanding
While official totals for outstanding credit in 2025/26 are still being finalised, bank lending growth is projected to be strong in 2026, with models estimating loan growth of around 16.5% for 2026. This suggests credit demand remains healthy, even after tighter lending norms in recent years. Trading Economics
RBI’s recent co-lending framework — effective Jan 1, 2026 — also aims to deepen access to loans by sharing risk between banks and NBFCs.
Growth Is Healthier — Not Frenzied
Lending has been decelerating from the post-pandemic surge, but it’s still in healthy territory.
Banks moderated loan growth in late 2024 and early 2025 due to tighter norms on unsecured loans like personal loans and credit cards. Growth slowed compared with the boom years of 2022–23.
Going into 2026, forecasts show credit growth staying elevated near ~16.5% — a sign that demand hasn’t dried up. Trading Economics
Key takeaway: Growth is returning to pre-pandemic norms, not collapsing.
Household Debt: More Important Than Ever
One of the most watched indicators for consumer credit health is household debt relative to GDP.
• As of March 2025, India’s household debt stood around 17.6% of GDP, a historic high recorded by CEIC Data. CEIC Data
• Other measures show household debt rising sharply in recent years (from ~35% of GDP in 2015 to ~45% by 2024), although exact datasets vary. Capital Economics
What this means: Indians are borrowing more — but still less, overall, than households in many developed economies.
Where People Are Borrowing For
The composition of household credit continues to shift:
1) Consumption-Led Loans Are Big
Detailed data shows non-housing retail loans — including personal loans, credit cards, and auto loans — accounted for over half of household debt by March 2025, with housing loans making up around 29%. HDFC Tru
Why this matters: More debt for daily needs and lifestyle purchases means you should be more intentional about why you borrow.
2) Asset Loans Still Important — But Not Enough
Home loans and other long-term asset loans remain crucial. But the increasing share of consumption loans means households must balance wants vs needs more carefully.
Risk and Stress: Here’s What We See
India’s banking system showed improvement in asset quality in recent years. For example, gross non-performing assets (GNPAs) of Public Sector Banks declined to around 2.58% in FY25. The Economic Times
That’s a positive signal — but stress still exists:
- Lower-quality and unsecured segments carry higher risks
- Strains showed up in slowing NBFC lending to banks in parts of 2025
Overall, the core banking book is stable — but you should still keep an eye on credit costs and repayment discipline.
New Rules That Affect You in 2026
Weekly Credit Reporting
Starting July 1, 2026, credit bureaus will update your credit behaviour weekly — not every 15 days. This means:
- Good habits show up faster
- Late payments hit your record sooner
So monitor your credit actively and avoid missed payments. The Times of India
What This Means for Your Wallet
Here’s how to use this credit environment to your advantage:
Match Borrowing to Purpose
Use long-term loans for assets like homes and education.
Use short-term credit for legitimate cash-flow needs — not impulse buys.
Keep Utilisation Low
Aim for under 30% on credit cards to support a better credit score.
Time Your Payments
Make big purchases right after your billing cycle opens to get maximum interest-free days, if you pay in full.
Know Reward Exclusions
Many cards don’t reward utility bills, government fees, fuel, or certain services. Avoid chasing points where none apply.
Where a UPI-Enabled RuPay Credit Card Fits In 2026
For frequent, small offline purchases — groceries, pharmacies, cafés — a RuPay Credit Card linked to UPI lets you:
Pay at QR codes on credit
Track spends in one bill
Potentially earn everyday cashback
Just remember:
- Not all merchants accept credit via QR
- Some categories (like fuel) may not earn rewards
If you use Kiwi, you get:
- A RuPay Credit Card you can link to UPI
- Everyday cashback on eligible offline UPI spends
- A lifetime-free card
- A premium Neon upgrade (optional) with higher milestone-based rewards
Fuel and certain merchant categories may not earn cashback, though surcharge waivers may apply.
Bottom Line
India’s credit market in 2026 is big and broadening, but no longer in explosion mode.
Growth still robust
Household debt rising responsibly
Credit quality improving
Rules are tightening to protect borrowers
Smart borrowing and disciplined repayment — especially when you use tools like UPI-linked credit — will make these credit tailwinds work for you, not against you.
