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, registering a steady increase above the five-year average, as borrowing for consumption purposes continues to rise faster than other types of credit, the Reserve Bank of India (RBI) said in its latest Financial Stability Report (FSR).

This is higher than the five-year average of 38.3%, but remains below China’s 60% and Malaysia’s 69%.

Household borrowing patterns have changed, with non-housing personal loans taken largely for consumption accounting for 55.3% of total household debt from financial institutions as of September 2025, the RBI said. Growth in personal loans and other unsecured loans was higher than residential, agricultural and commercial loans.
In terms of risk profile, the RBI said the risk profile of borrowers remained stable as the share of customers rated prime and above increased both in outstanding amounts and in the number of borrowers. While personal loans accounted for 22.3% of borrowings for consumption purposes, most borrowers remained in higher risk categories, despite some declines among prime-plus and super-prime customers.

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