India’s household debt increased to 41.3 per cent of gross domestic product at the end of March 2025, higher than the five-year average of 38.3 per cent, with consumption-related borrowings forming the largest share, the Reserve Bank of India said in its Financial Stability Report.
The central bank noted that despite the rise, India’s household debt remains lower than that of most peer emerging market economies.
Non-housing retail loans, largely taken for consumption, continued to dominate household borrowings and accounted for 55.3 per cent of total loans from financial institutions as of September 2025. This segment has grown faster than housing, agriculture and business loans over the years, reflecting increased reliance on personal loans, credit cards, vehicle loans and consumer durable financing.
RBI data showed that consumption purposes accounted for the largest share of household borrowing, followed by asset creation and productive activities. Personal loans made up 22.3 per cent of consumption loans, while housing loans accounted for 28.6 per cent of total household borrowings. Agriculture and business loans formed the remaining 16.1 per cent.
The report also said net household financial savings improved to 7.6 per cent of GDP in the fourth quarter of FY25, supported by a rise in financial assets and stabilisation of liabilities. Gross financial assets remained above 100 per cent of GDP, though growth in household financial wealth moderated due to a correction in equities and investment funds.
As of March 2025, deposits, insurance and pension funds constituted about 69.2 per cent of household financial wealth, even as the share of equities and investment funds rose marginally. A Sebi survey showed household participation in securities markets at 9.5 per cent, largely driven by urban centres, with equities remaining the preferred asset class.
The RBI said greater diversification of household savings beyond equities and bank deposits could support deeper financialisation of savings and long-term capital formation.