RBI Flags Rising Household Debt: A Closer Look at India's Borrowing Trends

India's per capita debt soared from Rs 3.9 lakh in March 2023 to Rs 4.8 lakh in March 2025. Higher-rated borrowers drive this increase, with housing loans forming a significant portion. The Reserve Bank of India emphasizes vigilant monitoring of shifting borrower profiles and lending patterns for financial stability.

India's per capita debt has significantly risen, escalating from Rs 3.9 lakh in March 2023 to Rs 4.8 lakh in March 2025, as per the Reserve Bank of India's financial stability report. This rise is predominantly fueled by higher-rated borrowers, who are contributing to the increased borrowing.

The report reveals that, as of March 2025, housing loans contributed to 29% of the total household debt, marking a steady growth trend. The report details that while overall housing loan growth remains stable, incremental progress is driven by existing borrowers increasing their loan amounts, now accounting for over one-third of the sanctioned housing loans.

A concerning trend identified in the report is the rising loan-to-value (LTV) ratios, with an increasing share of borrowers having LTV ratios above 70%. Moreover, delinquency rates, although significantly lower than during the COVID-19 pandemic, still persist among lower-rated and heavily leveraged borrowers.