The Silent Reshaping of India’s Credit Landscape

Overall, these trends suggest a very significant shift in the credit landscape. Credit seems to be moving from the supply side (businesses) to the demand side (consumers) of the economy. Considering the state of economic development of India and the relatively low level of per capita GDP, this move appears to be premature. Even within consumer cred

This may have also been due to consistently weak credit demand from the industry. After years of sluggish performance, private sector investment still has not picked up in a substantial manner. It is true that within industry, bank credit to medium industry grew at almost 20% and that to small industry at around 13%, but this was primarily driven b

For several years before the pandemic, the Indian banking sector was embroiled in a crisis that manifested in the form of rapidly rising non-performing assets (NPAs) on the balance sheets of banks. NPAs were triggered by large-scale defaults in the corporate sector, with the bulk being reflected on the balance sheets of inadequately capitalised pub

In FY 2010-11 the share of consumer credit in total bank credit was only 19%. By FY2023-24 this increased to around 33%. Nearly half of this credit is unsecured or quasi-secured (secured against weak collateral), which makes it riskier. In the post-pandemic period, much of the growth in bank credit has in fact been driven by growth in consumer lend

First, the Indian corporate bond market is highly skewed and accessible only to large, established, and high-rated firms. Over 80% of bonds issued are rated AA and above.