Gen Z's buy-now, pay-later habit fuelling unsecured loans, worrying regulator, Pg17

Key Highlights:

• Non-housing retail loans constituted 58.4% of households' total borrowings as of March 2026, up from 54.9% in March 2025.
• The Reserve Bank of India (RBI) has flagged household debt accumulation, especially among lower-rated borrowers, as requiring close monitoring.
• Outstanding loans against gold jewellery jumped to ₹4.61 lakh crore by March 2026, while other personal loans reached ₹17.32 lakh crore.
• Fintech firms hold a 56.8% market share in small-ticket personal loans (less than ₹50,000), with 70.5% of their loan books being unsecured.
• The share of over-leveraged consumers rose threefold from 5% in FY17 to 18% in FY24, before easing to 15% in FY26.

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Detailed Insights:

• The surge in non-housing retail loans indicates a shift towards consumption-led borrowing rather than asset creation.
• Average outstanding debt per borrower increased to ₹4.78 lakh by March-end 2025, from ₹3.41 lakh in March-end 2018.
• Gross Non-Performing Asset (NPA) ratios stood at 0.7% for secured retail loans and 1.7% for unsecured retail loans by March 2026.
• The RBI's Financial Stability Report highlighted potential risks to asset quality if economic conditions worsen, impacting borrower cash flows.
• Delinquencies in small-ticket personal loans stood at 6.4% as of March 2026, with roughly half of these loans extended to borrowers under 35.
• The credit-active population in India has risen from 11% a decade ago to approximately 28% currently, according to CIBIL TransUnion data.
• Consumption borrowing, driven significantly by younger consumers including Gen Z, often has repayment tenures of less than three years.
• Outstanding credit card debt surpassed ₹3 lakh crore last fiscal, with delinquencies (overdue payments between 90 and 360 days) rising over 40% year-on-year, as per CRIF High Mark.

Key Concepts Involved:

• Unsecured Loans: Loans not backed by collateral, posing higher risk to lenders due to lack of asset recovery options.
• Non-Performing Assets (NPA): Loans or advances for which the principal or interest payment remained overdue for a period of 90 days.
• Delinquency: The state of being behind on payments, indicating a borrower's failure to make timely payments on debt obligations.
• Household Debt: The total amount of debt owed by individuals and households, including mortgages, credit card debt, and personal loans.