Retail Credit Demand Eases As Borrowers Move To Big-Ticket Loans, Says TransUnion CIBIL Report

As economic activity has slowed, demand for retail credit has also moderated in the March quarter, particularly among consumers aged 35 and below, as loan originations shift toward high-ticket segments, the latest report by TransUnion CIBIL Credit Market Indicator for June said.

According to the report, consumption-led credit products including personal loans, consumer durable loans, and credit cards have shown signs of stabilisation in delinquency rates since September 2024, signaling improved credit health in these segments.

However, overall credit demand has softened, with younger consumers exhibiting a more pronounced decline in borrowing activity.

Loan originations have increasingly favoured larger-ticket loans, with home loans exceeding Rs 1 crore growing by 9% year-on-year and two-wheeler loans above Rs 1.5 lakh rising 7%.

Consumer durable loans over Rs 1 lakh and auto loans in the Rs 10-25 lakh bracket also saw healthy growth, reflecting a cautious but targeted lending approach by financial institutions, the report said.

While public sector banks showed a modest 3% on year increase in accounts disbursed in the March quarter, private banks experienced a 12% decline and NBFCs saw a rise of 13%. Outstanding loan balances increased across lender categories, with NBFCs recording a 25% rise year-on-year.

Geographically, credit demand in rural and semi-urban areas has been more resilient compared to metro and urban centers, suggesting a shift in credit penetration patterns. The share of new-to-credit consumers in originations has declined, indicating lenders' increased caution in extending credit to first-time borrowers.

Credit performance metrics also show stable delinquency environment, with balance-level 90+ days past due rates remaining steady or improving for most loan categories.

Personal loans, in particular, continue to show signs of improvement in delinquency trends. The prime consumer segment has witnessed higher upgrades, and the share of above-prime consumers in credit supply has increased, reflecting enhanced credit quality among borrowers.