India’s retail credit market growth in the July–September 2025 quarter, de-grew year-on-year (YoY) even as Goods & Services Tax (GST) cut and festive season demand provided a boost to consumption-led credit, according to TransUnion CIBIL’s latest Credit Market Indicator (CMI) report.
The CMI, which tracks retail credit demand, supply, consumer behaviour and performance for the September quarter, was lower at 99 than 100 YoY and 103 in September 2023 quarter.
However, Quarter on Quarter (QoQ) it rose from 98 signalling an improvement in overall credit conditions on a sequential basis.
The implementation of GST rate rationalisation in September 2025, ahead of the festive season, supported a revival in retail credit demand, particularly in consumer-facing loan segments.
Consumer durable loans recorded the strongest increase, with festive-period demand nearly 1.5 times higher than the January–June base period, according to the report.
Two-wheeler and auto loans also witnessed higher incremental demand during the festive period, reflecting improved affordability and a pickup in discretionary spending.
“GST 2.0 was a much-needed step to stimulate economic growth, and its positive impact is evident in the improvement of consumer sentiment and the upward trend in credit demand. While fostering and sustaining this credit demand is crucial, it is equally important to promote responsible borrowing practices. Lenders must engage with consumers at multiple touchpoints to ensure financial discipline and sustainability to support healthy growth of credit in India,’’ said Bhavesh Jain, MD and CEO, TransUnion CIBIL.
The CMI for demand improved to 95 in the quarter ended September 2025, compared with 93 in the same period last year.
Despite the quarter-on-quarter improvement, the YoY growth in credit-active consumers slowed to 9% in the September 2025 quarter, as lenders continued to adopt a calibrated approach to credit expansion, as per the report.
This moderation masked positive shifts within specific borrower segments.
According to the report growth among new-to-credit consumers turned positive at 5% year-on-year, reversing a decline recorded a year earlier, while credit demand among borrowers below 35 years of age rose 12% year-on-year.
Notably, semi-urban and rural markets accounted for the bulk of this expansion, underscoring the role of emerging geographies in sustaining retail credit growth even as overall expansion softened.
On the supply side, lenders continued to focus on secured and asset-backed lending. The CMI for supply rose to 97 in the September 2025 quarter from 91 a year earlier, driven by growth in home loans, auto loans, consumer durable loans and gold loans.
Unsecured lending remained muted, with credit card originations continuing to decline, reflecting lenders’ focus on portfolio quality amid evolving risk conditions as per the report.
Semi-urban and rural regions accounted for 61% of total credit supply during the quarter, reinforcing the ongoing shift in lending activity beyond metro and urban centres.
The overall asset quality remained stable, with the CMI for credit performance improving to 105 in the September quarter from 100 a year earlier. Delinquency levels across most major retail loan categories remained contained.
However, the report flagged early signs of stress in specific segments of micro loans against property and small-ticket housing loans.
While property loans’ performance improved with balance-level 90+days delinquencies at 1.4%, improving by 29 basis points YoY, early signs of stress were noted in the micro-loans against property (LAP) segment3, where delinquency increased 45 basis points YoY, reaching 3.3% as of September 2025.
In the micro-LAP segmentearly delinquencies measured as 90+ days past due reported in 12 months on book rose 29 bps YoY to 2.2% for originations in the quarter ended September 2024, which is higher than the overall LAP early delinquencies at 1.6%. In small-ticket housing loans4, early delinquencies rose 19 bps YoY to 0.8% for originations in the quarterended September 2024, which is higher than overall housing loan early delinquencies at 0.5%.
Consumer durable loans recorded the strongest increase, with festive-period demand nearly 1.5 times higher than the January–June base period, according to the report.
| Photo Credit:
ADNAN ABIDI
“While overall asset quality remains stable, recent trends indicate emerging stress in specific loan segments such as micro-LAP and small-ticket housing loans. As a facilitator of credit inclusion, TransUnion CIBIL is committed to equipping lenders with actionable insights and advanced analytics to navigate these challenges. Our solutions enable lenders to identify early warning signals, assess risk effectively, and engage borrowers responsibly. By leveraging these capabilities, lenders can mitigate stress, maintain portfolio health, and continue fostering a robust and inclusive credit ecosystem,” Mr. Jain added.
Published – December 15, 2025 08:14 pm IST
