Retail Credit Growth Halves to 5% in Q4 FY25: TransUnion CIBIL Report

India’s retail credit market saw slower growth in the January-March 2025 quarter, according to TransUnion CIBIL’s June 2025 Credit Market Report. New loan originations rose by 5% year-on-year in March 2025, compared to a 12% increase in March 2024. This slowdown came despite the Reserve Bank of India cutting its benchmark lending rate by 25 basis points to 6.25% in February.

Demand Weakens Among Young Borrowers

The fall in demand was more noticeable among borrowers aged 35 and below. Enquiries from this group dropped to 56% in Q4 FY25, down from 58% the previous year. The share of new-to-credit (NTC) borrowers also declined by 3 percentage points.

Shift Toward Larger Loans

While overall loan volumes declined or remained flat across several categories, the value of higher-ticket loans increased. Home loans above ₹1 crore grew 9% year-on-year, even as total home loan volumes fell 7%. Similarly, 2-wheeler loans above ₹1.5 lakh grew by 7%, while overall two-wheeler loan volumes declined by 1%.

In the case of personal loans, volumes rose 6%, but there was no change in the average ticket size. Credit card originations declined sharply by 32%, indicating reduced activity in this segment.

Read more: Credit Growth Hits 3-Year Low, Drops to 8.97% in May 2025!

Some Improvement in Repayments

Delinquency rates showed marginal improvement. Credit card delinquencies (90+ days past due) fell to 2.00% in March 2025 from 2.04% in December 2024. Personal loan delinquencies dropped to 1.14%, down from 1.34% in the previous quarter.

Rural and Semi-Urban Credit Demand 

Enquiry volumes from rural and semi-urban areas rose to 52% in Q4 FY25, up from 49% in the same period last year. In contrast, urban and metro areas saw a decline in their share from 51% to 48%.

Conclusion

Retail credit growth slowed in the March 2025 quarter despite lower interest rates. Demand dropped more in urban areas and among younger borrowers, while rural demand and higher-value loan segments remained more stable.

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