RBI: India’s per capita borrower debt rises

New Delhi

The Reserve Bank of India’s latest Financial Stability Report reveals a sharp rise in the per capita debt of individual borrowers, which increased from ₹3.9 lakh in March 2023 to ₹4.8 lakh in March 2025. This growth is largely driven by higher-rated borrowers and reflects the expanding reliance on credit, especially housing loans.

As of March 2025, housing loans made up 29% of total household debt. While overall growth in housing loans has remained steady, a significant portion of new credit is being taken by existing borrowers. Their share now accounts for over one-third of all housing loans sanctioned.

The report also highlighted a rising trend in loan-to-value (LTV) ratios, with more borrowers having LTV ratios above 70%. Although loan defaults have decreased from the peak levels during the COVID-19 period, delinquencies remain high among lower-rated, highly leveraged borrowers.

India’s household debt has been growing steadily, supported by increased borrowing from the financial sector. By December 2024, household debt stood at 41.9% of GDP—still lower compared to many other emerging market economies.

Among household borrowings, non-housing retail loans—used mainly for consumption, such as auto loans and consumer durable loans—have taken the lead. These loans made up 54.9% of total household debt as of March 2025 and accounted for 25.7% of disposable income as of March 2024.

The RBI stressed the importance of closely monitoring shifts in borrowing patterns and borrower profiles to safeguard long-term financial stability amid the rising debt levels.