Banking Central | Credit is the new festival offer

RBI is keeping a close watch on quick credit

There is quiet but a big shift on — the way India consumes and pays for it.

There was a time when festival shopping meant dipping into savings but this year, for several Indians, it meant tapping a loan app.

Across fintech platforms and banks, demand for quick credit rose sharply — by as much as 50 percent over the previous year — during the season, according to industry estimates.

Digital lenders disbursed more than Rs 1 lakh crore worth of personal loans this year. Credit card transactions climbed over 30 percent in value.

Festival season, which typically runs from September to late October or early November, is when big tickets purchases are done — from big screen TVs, phones, cars to even houses.

Buy-now-pay-later offers flooded e-commerce checkouts, luring not just first-time borrowers but even salaried professionals with stable incomes.

Do not mistake it for just a spending surge — it is a cultural shift. Borrowing is no longer a fall-back for the desperate or cash-strapped. It is a routine financial tool — a bridge between desire and affordability.

For the urban middle class, and increasingly for Tier-II and III towns, credit has become as ordinary as a debit swipe.

The old anxiety about debt has given way to a new comfort with leverage. That comfort has been built on technology. Approvals now take minutes, repayment schedules are flexible and credit lines are embedded within UPI apps.

Fintechs have turned festive demand into a well-oiled lending cycle. They have made borrowing frictionless — and in doing so, they’ve changed how India consumes.

After the euphoria…

But easy credit brings hard questions. Instant approvals often mask shallow underwriting. Many small-ticket loans — in the Rs 10,000-Rs 50,000 range — rely on limited credit data and optimistic repayment assumptions.

If even a fraction of borrowers stumble, collection costs can rise sharply. The festive euphoria can quickly turn into delinquency trouble once the bills start coming in.

Regulators haven’t missed the signals. The government’s plan to criminalise unregistered digital lending shows how deep the problem runs.

The Reserve Bank has also nudged fintechs to disclose terms more transparently and tighten partnerships with regulated entities. The message is simple: growth is welcome but not at the cost of governance.

Lenders, to their credit, seem to be adjusting. Some fintechs have cut exposure to first-time users and are focusing on repeat, better-rated customers. Others are tying up with banks to access cheaper capital and stronger risk models. The more disciplined players know that scale without prudence is a short-lived thrill.

For borrowers, the lesson is equally clear. A festival purchase feels lighter when broken into EMIs but the liability lingers long after the lights fade. India’s household debt may still be low by global standards, but the speed of growth in unsecured retail credit deserves attention.

The festival season has shown how quickly India’s borrowing appetite is growing — and how seamlessly it’s being normalised. Credit has become the new festival offer. Whether this turns into a story of empowerment or excess will depend on how sensibly both sides handle the hangover.