India's credit market is witnessing a notable shift in borrowing patterns, with younger consumers showing reduced appetite for loans while semi-urban and rural regions emerge as new engines of credit growth, according to TransUnion CIBIL's latest analysis.

 

Declining Youth Credit Momentum

Loan disbursements to consumers in the 18-35 age bracket expanded by just six per cent during the April-June 2025 quarter, marking a significant deceleration from the nine per cent growth recorded in the corresponding period of 2024, revealed TransUnion CIBIL's September 2025 Credit Market Report.

 

This moderation in borrowing activity among younger demographics contributed to the Credit Market Indicator (CMI) declining to 98 in the first quarter of fiscal year 2026, compared to the same timeframe in the previous year. The CMI serves as a comprehensive benchmark that evaluates India's credit ecosystem across multiple dimensions including demand patterns, lending availability, borrower conduct, and repayment performance.

 

Shifting Demand Dynamics

The younger borrower segment's proportion of overall credit demand contracted to 56 per cent in the June 2025 quarter, down from 58 per cent year-on-year. While interest in personal loans, consumer durable financing, and gold-backed loans maintained robust levels, credit card applications experienced a downturn. Additionally, metropolitan and urban areas have witnessed a three per cent decline in loan approvals to younger borrowers over the past two years.

 

"The recent dip in credit demand from this segment may reflect a more cautious mindset. While this may be temporary, it is a reminder of how important it is to equip young borrowers with the right tools and support to help them grow confidently along their credit journey," commented Bhavesh Jain, Managing Director and CEO of TransUnion CIBIL.

 

Rural and Semi-Urban Markets Compensate

Despite the slowdown in youth lending, semi-urban and rural territories demonstrated considerably stronger performance, with loan disbursement volumes in these areas climbing nine per cent on an annual basis, providing stability to the broader credit market.

 

These regions experienced particularly impressive growth in specific lending categories. Personal loan originations in rural and semi-urban markets surged by 15 per cent year-on-year, representing the highest growth rate. Consumer durable loans followed with nine per cent expansion, while gold loans registered seven per cent growth. The combined contribution of these geographies to total loan originations increased to 61 per cent during the June quarter.

 

Strategic Outlook and Risk Management

Jain emphasized the importance of careful portfolio oversight, particularly in segments such as two-wheeler financing, unsecured business lending, and commercial vehicle loans. He stressed that strengthening risk assessment frameworks remains crucial for achieving inclusive growth across all market segments.

 

"India's credit landscape is evolving with resilience in semi-urban and rural demand, a strategic shift toward secured lending, and stable portfolio performance. These trends signal a maturing market focused on sustainable and inclusive growth," Jain stated.

 

The findings suggest that India's lending sector is undergoing a fundamental transformation, with credit access expanding beyond traditional urban centers while demonstrating a more measured approach to youth lending. This rebalancing indicates a credit market that is diversifying geographically and potentially becoming more risk-conscious in its approach to younger borrowers.