Retail Loan Growth Slows as Young Borrowers Retreat

Retail loan origination growth in Q4 FY25 declined to 5% as younger borrowers avoided credit. The fall is attributed to slower growth in consumer durable loans and credit cards. Measures by RBI helped moderate growth in unsecured loans. NTC borrower origination and rural credit volumes showed shifts.

Growth in retail loan originations dropped to 5% in the fourth quarter of FY25, revealed a credit report from Transunion Cibil on Friday. The report highlights a cautious approach among younger borrowers refraining from credit.

The credit information company attributed the slowdown primarily to the consumer loan segment, noting a significant decline in credit card and personal loan issuance. This trend follows the RBI's interventions in the unsecured loan sector, aimed at mitigating rapid growth.

Notably, the share of New-to-Credit (NTC) consumers decreased- a concerning development for financial inclusion. Rural credit inquiry volumes rose modestly, shifting away from urban areas. Amidst this, asset quality improved across most segments, though credit card delinquencies inched upwards.

(With inputs from agencies.)