Powered by data, unsecured loans set to soar over next 5 years in India

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26 Aug, 2025 12:21

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The retail loan book of Indian lenders is likely to double to Rs 96 lakh crore over the next five years, according to a research conducted by ICICI Bank and Crisil Ratings. The growth will be led by unsecured credit such as personal loans, credit cards and consumer durable loans.

Anup Bagchi, Executive Director, ICICI Bank said the quality of data available to lenders and the ability to analyze it has improved over the years.

"A big change that is happening in India is that a lot of data is now available to have higher confidence on the creditworthiness (of the borrower)," Bagchi said, adding that among other parameters, the private lender analyzes GST filings data coupled with bank statements of the borrower to offer products.

Data relating to the borrower's income, assets, liabilities, health records, travel, mobile, legal, online and utility bill payments are being sourced by banks to make lending decisions.

Personal loans, credit cards and consumer durable loans are all likely to clock over 20 percent growth in the next five years, as per the report. Other loans such as home loans and car loans are estimated to grow around 15 percent, while education loans may grow at 10 percent in the same period.

Amish Mehta, Chief Operating Officer and President, CRISIL said a low base, faster transmission of rate cuts and increase in consumption due to urbanisation are the factors that will support healthy growth in unsecured credit.

India's economic growth, which is largely feared to have slowed down to 5 percent levels this year, is likely to recover to 6.5-7 percent levels over the next five years, according to Crisil Ratings. A behavioural shift in the tendency of customers to increasingly access easy credit will also aid in the growth of personal loans. However, a prolonged slowdown poses a risk to loan growth and repayments going ahead.

Given this shift towards higher-yielding unsecured loans, systemic profitability is expected to remain steady, according to the report. Other than tapping digital channels, Indian lenders are also expected to explore new smaller geographies to expand their retail base, the report said.