Retail credit market: Growth slows to 5% despite RBI rate cut; credit health hits two-year low
India's retail credit market continued to lose momentum in the final quarter of FY2024–25, with fresh loan originations growing at just 5 per cent in March 2025, against the 12 per cent seen a year ago over the corresponding period.
This slowdown comes even after the RBI cut its benchmark lending rate by 25 basis points to 6.25 per cent in February. According to TransUnion CIBIL's latest Credit Market Report, released in June, the Credit Market Indicator (CMI) dropped to 97, its lowest reading in two years.
A higher CMI score signals a healthier credit market, while a lower score points to weakening conditions.
'The muted demand was more pronounced among consumers 35 years old or younger.
Consequently, the share of new-to-credit (NTC) consumers that lenders supplied decreased by three percentage points during the same period, given that a large share of younger consumers constitute the NTC segment,' the report noted.
The share of credit enquiries from the under-35 age group dropped to 56 per cent in the March 2025 quarter, from 58 per cent in the same period the previous year.
However, there were some bright spots.
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Credit card delinquencies saw consistent month-on-month declines from January to March.
The report, cited by PTI, showed that besides personal loans, the value of loans grew faster than their volume, suggesting a shift towards higher-value borrowing. The rising share of large-ticket home and two-wheeler loans also reflected lenders' growing preference for credit backed by high-value assets.
According to the report, home loans exceeding Rs 1 crore grew by 9 per cent year-on-year in the quarter ending March 2025, against the 7 per cent decline seen across the overall home loan segment during the same period last year.
High-value two-wheeler loans above Rs 1.5 lakh recorded a 7 per cent annual growth, reversing the 1 per cent contraction seen a year earlier.
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