Senior Couple Meeting with Financial advisor
| Photo Credit:
Deepak Sethi
Household debt in India continued its upward trajectory in 2025-26, rising to 45.5 per cent of GDP at the end of September from 41.3 per cent at the end of FY25, according to the Reserve Bank of India’s latest Financial Stability Report.
Despite the increase in borrowings, the RBI noted an improvement in the quality of borrowers. The share of higher-rated borrowers, classified as prime and above, increased both in terms of outstanding credit and the number of borrowers. The improvement was visible across consumption as well as productive loans.
The RBI said the growth in household debt was largely driven by non-housing retail loans. As of March, such loans accounted for 58.4% of total household borrowings, continuing to outpace housing, agriculture and business loans. The report also highlighted that loans taken for consumption purposes now account for nearly half of total household debt, making them the biggest contributor to the rise in borrowings. Productive-purpose loans were the second-largest category, while borrowing for asset creation expanded at a relatively slower pace.
Compared with other emerging economies, India’s household debt level is higher than that of Chile (44.1 per cent), Brazil (36.7 per cent) and South Africa (33.6 per cent), but is lower than countries like Thailand (87.3 per cent), Malaysia (69.9 per cent) and China (59 per cent).
Published on June 30, 2026
