In today’s time, everyone seems to be in the race to become better than others in the case of lifestyle, even if they get stuck in the debt trap. This is true and the figures are also pointing out that people are now drowning in debt not to buy or build a house or to build their lifestyle and the burden of EMI is increasing on them. The report, quoting an experts, states that especially the middle class, which is taking a bank loan or credit card loan, 55 percent of them are not home loans. These loans are being taken to spend on lifestyle related things. That is, borrowings are being taken for expensive mobile-bikes or cars and other items.
How did the middle class get trapped in debt trap?
People who have fun fulfilling their hobbies with borrowed money are deliberately trapped in the EMI trap, because today you want to take an expensive iPhone (iPhone), or expensive bikes, or some more items are found in the easy installments of every month. In some cases there is no money in the pocket, yet you can buy your desired thing on zero down payment EMI. In this case, Credit Card is playing an important role, in fact, do not make EMI, yet it does not have to empty the pocket immediately on buying something through it, but it is some time to pay the dues on payment from it.
This is the reason that the use of credit cards in the country has especially increased rapidly. According to the report, in the last 13 years, the Credit Card Spent has increased by 13 times and has now increased from Rs 1.2 lakh crore to Rs 15.6 lakh crore.
More than half the loan for personal expenses
Personal finance experts are also saying that India’s domestic debt consumption is growing rapidly, while the asset is moving away from construction. In the Business Today report, Financial Expert Pranjal Kamra says that the average personal loan has increased by 23 per cent in just the last two years and more than half of this borrowing is now being spent on personal needs. In a linkedin post, Kamra rescued that the average loan of per capita borrower increased from Rs 3.9 lakh in 2023 to Rs 4.8 lakh by March 2025.
Credit card became a big source of debt
The biggest change is how and why are Indians borrowing now? So understand this through data. According to Kamra, non-residential retail loans are now 55% of the total loan, which is more than the Home Loan. Let me tell you that in the loan being taken, the share of the home loan is only 29 percent. Whereas, 55 per cent include credit cards, personal loan and car loan. Meaning there are loans that are usually associated with consumption rather than asset construction. This can be easily understood by looking at the data of retail loan growth (CAGR).
| Debt of debt | In pre-mahamari (fY09-19) | After the epidemic (FY19-24) |
| Credit card | 12.1% | 21.0% |
| Personal loan | 15.1% | 18.2% |
| Auto loan | 16.5% | 14.8% |
| Home loan | 19.0% | 15.5% |
During this period, the biggest jump has been seen in the use of credit cards. Where the expenditure on 13 years credit card has been increased from 1.2 lakh crore to 15.6 lakh crore rupees. So at the same time, the number of credit cards in circulation has also increased from 5 times to 2 crore to 10.8 crore.
Now debt for lifestyle and satisfaction
Pranjal Kamra gave the essence of this change in this way, explaining it through all the data, how Middle Class is getting trapped in the rapid debt. He said that our parents used to borrow or loan to make property, today most people are borrowing to get immediate satisfaction. In such a situation, the big question is whether the figures are a sign of structural consumer change or any financial threat. The sharp increase in Retail Loan has also worried the Central Bank (RBI) and in the recent months the Reserve Bank of India has repeatedly marked the growing personal loan and credit card dues as a possible risk for domestic balance sheet.
Meanwhile, Economists are also warning that if the growing unsecured loan is not curbed, it can increase the risk of default. However, they say that consumption -based borrowings can definitely promote economic development in the near future, but it also indicates deep changes in the attitude of young Indians towards the money.
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