Per Capita Debt Grows To Rs 4.8 Lakh In March 2025: RBI

The per capita debt of individual borrowers has grown from Rs 3.9 lakh in March 2023 to Rs 4.8 lakh in March 2025 at an aggregate level, according to the Financial Stability Report.

The rise in per capita debt has been mainly led by the higher-rated borrowers, the report stated, adding that the share of better-rated customers (prime and above) among total borrowers is growing, both in terms of the outstanding amount and number of borrowers.

"This is important from a debt serviceability and financial stability perspective, as it indicates that household balance sheets at an aggregate level are resilient," the central bank said in the biannual report, published on Monday.

India’s household debt has been increasing in recent years, driven by rising borrowing from the financial sector. However, as of end-December 2024, India’s household debt at 41.9% of GDP at current market prices was relatively low compared to other emerging market economies. Among broad categories of household debt, non-housing retail loans, which are mostly used for consumption purposes, formed 54.9% of total household debt as of March 2025 and 25.7% of disposable income as of March 2024.

Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans.

Housing loans, on the other hand, formed 29% of household debt, and their growth has been steady. However, disaggregated data shows that incremental growth has been mainly driven by the existing borrowers who are availing themselves of additional loans, and their share has increased to more than a third of the housing loans sanctioned in March 2025.

Moreover, the share of borrower accounts with loan-to-value (LTV) ratios greater than 70% is also rising, and delinquency levels are higher for lower-rated and more leveraged borrowers. However, these have declined considerably from their levels during COVID-19.

An update of the analysis of financial wealth of Indian households shows that the financial wealth of households grew sharply in 2023-24. Since Q3 FY20, asset price gains contributed to around one-third of the increase in the financial assets, while the remaining was on account of an increase in financial savings.

Deposits and insurance and pension funds formed nearly 70 per cent of household financial wealth as of end-March 2024, even as the share of equities and investment funds has increased.

Overall, the risks to the Indian financial system from lending to households remain contained, with an easing monetary policy cycle likely to reduce debt service pressures on borrowers going forward. However, the trend in household debt accumulation, especially among lower-rated borrowers, requires close monitoring.