Compiled By : Vimal Saboo, Chief Business Officer at Fibe
About Vimal: He is a Chartered Accountant with 22 years of experience in banking and credit. At Fibe, he leads development of the Credit Risk Profiling system and oversees Credit Risk, Analytics, Collections, and Operations.
Retail consumer lending in India gained momentum between 2000 and 2004 as private sector banks expanded into consumer finance. The sector slowed during the global recession of 2008 but recovered within a few years and resumed growth from around 2012. Over the past five years, consumer lending has accelerated notably, driven by fintech participation and product innovation.
Today, roughly 300 million Indians have taken some form of organized credit, much of it through consumer durable loans or Kisan credit cards. Total consumer credit outstanding in India is approximately US$720 billion (about Rs 52 lakh crore). On a per capita basis, outstanding debt in India averages around US$550 (around Rs 40,000), or roughly 30% of per capita income.
In contrast, the United States has a long-established credit culture where consumers commonly use credit cards and repay purchases over time. Credit card outstanding balances in the US are close to US$950 billion, which equates to roughly US$6,500 per person. About 61% of Americans hold at least one credit card, and the average consumer carries about four cards. Mortgage debt in the US totals around US$10 trillion, and the average American’s personal debt is approximately US$93,000, or about 175% of per capita income.
Demographic shifts will continue to influence credit demand. Millennials and Gen Z tend to be more open to borrowing for discretionary spending and aspirations, suggesting stronger consumer credit growth over the next decade. At the same time, product innovation—short-term loans, debit-card EMI options, and buy-now-pay-later (BNPL) solutions—alongside traditional home and auto financing, is making credit increasingly accessible by simplifying customer onboarding and purchase journeys.
Consumers now encounter numerous credit choices across channels. Small, point-of-sale credit lines (often Rs 5,000–10,000) are offered by e-commerce platforms for use during purchases and can be repaid in a single transaction or via EMIs. Merchants frequently partner with lenders to make purchases effectively zero-cost at the point of sale. These convenient, fragmented credit options improve access but also raise the need for responsible borrowing.
With multiple small limits distributed across platforms, individuals should exercise discipline when taking on credit and when managing repayments to avoid overextension. Even small, repeated borrowings can compound into a significant liability if not monitored carefully.
The COVID-19 pandemic increased the cost of credit, and its effects are likely to persist for another few quarters—particularly in segments exposed to SME and MSME stress. Despite these headwinds, lenders are returning to the market and expanding offerings, introducing new products and moving toward more aggressive lending strategies as economic conditions stabilize.
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