India’s household debt seen above 5-yr average, but lower than China’s

Mumbai: India’s household debt rose to 41.3% of gross domestic product at the end of March 2025, extending a steady increase above its five-year average, as borrowing for consumption continued to expand faster than other forms of credit, the Reserve Bank of India (RBI) said in the latest Financial Stability Report (FSR).

The ratio, up from a five-year average of 38.3%, remains lower than China’s 60% and Malaysia’s 69%.

The RBI said that household borrowing patterns have changed with non-housing retail loans, largely taken for consumption, accounting for 55.3% of total household borrowing from financial institutions as of September 2025. Growth in personal loans and other unsecured loans were higher than housing, agricultural and business credit.

In terms of risk profile, RBI said the risk profile of borrowers remains stable as the share of prime and above-rated customers has increased in both outstanding amounts and number of borrowers. Personal loans formed 22.3% of consumption-purpose borrowings, with most borrowers remaining in higher risk categories despite some downgrades among prime-plus and super-prime customers.

“From a risk perspective, the share of better-rated customers, viz., prime and above, has increased both in terms of the outstanding amount and number of borrowers, indicating that the overall resilience of the household sector remains sound,” RBI said.