Mumbai: Demand for retail credit in India’s semi-urban and rural regions continued to rise in April-June this year, reflecting the higher level of consumption even as overall credit demand in the country from younger consumers (aged 18–35) declined during the quarter, according to a TransUnion CIBIL report released on Wednesday.
The recent RBI interest rate cuts combined with the reduction in Goods and Services Tax (GST) rates and increased demand due to the upcoming festive season, are expected to boost consumer spending and stimulate lending momentum, the report states.
According to the credit market report, the growth in loan originations for younger consumers slowed to 6 per cent in the quarter under study, compared to 9 per cent in the same period last year. This slowdown was cushioned to some extent by a robust 9 per cent year-on-year growth in loan origination volumes from rural and semi-urban regions, reflecting stable consumption patterns outside metro areas.
The most significant growth in rural and semi-urban regions, by 15 per cent year-on-year, was in personal loans which was more than the growth rate than those seen for other leading products in these geographies such as gold loans (7 per cent) and consumer durable loans (9 per cent) “India’s credit landscape is evolving with resilience in semi-urban and rural demand, a strategic shift towards secured lending, and stable portfolio performance.
These trends signal a maturing market focussed on sustainable and inclusive growth,” said Bhavesh Jain, MD & CEO, TransUnion CIBIL. The share of demand from young consumers (age 18-35 years) as a percentage of total demand fell to 56 per cent in the April-June 2025, compared to 58 per cent in same period a year ago. Personal loans, consumer durable loans and gold loans remained popular among this age group, while credit cards saw a year-on-year decline.
The overall decline in supply was especially visible in metro and urban geographies, where the share of young consumers in loan originations has decreased by 3 per cent over the last two years. Supply is measured as originations by lenders. Younger consumers often start their credit journey with products that offer convenience, like personal loans, consumer durable loans, or credit cards.
As they progress through life stages, there tends to be a natural shift toward secured, long-term credit options that better suit their evolving needs, the report states. “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,” Jain said.
Lenders have an opportunity to tap into resilient pockets of growth, particularly in semi-urban and rural regions, where credit demand continues to hold strong. By tailoring products and outreach to these markets, and by nurturing responsible credit behaviour among younger consumers, lenders can drive inclusive and sustainable growth. Home loan origination volumes also grew, by 2 per cent year-on-year, compared to a 3 per cent year-on-year decline for the same period a year ago.
In value terms, home loan originations increased by 6 per cent year-on-year in the quarter ended June 2025, marginally higher than the 5 per cent for the same period of the previous year. For two-wheeler loans, origination volumes fell by 1 per cent in the quarter ended June 2025, in contrast to a 15 per cent growth in the same period a year ago, while in value terms two-wheeler originations saw a slower growth of 3 per cent compared to a growth of 21 per cent in the same period a year ago. Similar to credit demand, the share of semi-urban and rural consumers in loan originations also saw a marginal one percentage point year-on-year increase to 61 per cent for the quarter ending June 2025, the report added.
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