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Household debt up, but India still lags emerging-market economies: RBI
Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.
As of December 2024, India's household debt-to-gross domestic product ratio stood at 41.9 per cent. '...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent 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,' the RBI said in its report.
Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data show that incremental growth has mainly been driven by existing borrowers availing themselves of additional loans. Their share rose to more than a third of the housing loans sanctioned in March 2025.
'...The share of borrower accounts with loan-to-value ratios greater than 70 per cent 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,' the RBI said.
According to the central bank, per capita debt among individual borrowers rose from ₹3.9 lakh in March 2023 to ₹4.8 lakh in March 2025, primarily led by higher-rated borrowers.
'The share of better-rated customers (prime and above) among total borrowers is growing, both in terms of the outstanding amount and the 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 RBI said.
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