How small-ticket loans are driving India's consumption story
What's the story
India's consumption story is being driven by easy access to credit, with small-ticket consumer loans becoming the preferred financing option for discretionary purchases. From smartphones and TVs to furniture and home appliances, these loans are now a major part of household borrowing. According to the Reserve Bank of India's latest Financial Stability Report, non-housing retail loans made up 58.4% of total household borrowings as of March 2026.
Credit usage
Financing lifestyle purchases
Consumption loans now make up nearly half of total household borrowings, indicating that consumers are increasingly relying on credit instead of savings for lifestyle purchases.
This trend is especially evident in consumer durable financing, with industry estimates suggesting 35-40% of all purchases are now financed through EMIs.
Attractive financing schemes like no-cost EMIs and zero down-payment offers have made financing a key driver of consumer demand.
Loan growth
Ticket sizes on the rise
The average ticket size for consumer durable loans is also on the rise.
According to the Centre for Research in International Finance (CRIF), loans of ₹50,000 and above accounted for 29% of new consumer durable loan originations in Q4 FY26. This is an increase of around 5% from the previous year.
The outstanding consumer durable loan portfolio also grew by 20.8% to ₹1 lakh crore, driven by sustained demand for electronics, home appliances, and premium consumer products.
Market access
Entry point into organized credit market
For lenders, consumer durable finance is more than just financing televisions or refrigerators.
CRIF says it is becoming the first formal borrowing experience for millions of Indians, making it the entry point into the organized credit market.
Once borrowers establish a repayment history, lenders can cross-sell higher-margin products such as personal loans, credit cards, and insurance.
This significantly improves customer lifetime value and has prompted aggressive expansion by non-banking finance companies (NBFCs).
Business growth
Expansion by NBFCs
Bajaj Finance, India's largest consumer lender, reported nearly 20% growth in its urban consumer finance business in FY26.
The company's EMI card customer base crossed 94 million and consumer finance disbursements increased by 24%, outpacing loan volume growth of 19.55%.
Cholamandalam Investment and Finance also said its secured business and personal loans division remained among its highest-return businesses during FY26 with disciplined growth in small-ticket lending to micro enterprises and self-employed customers.
Strategy shift
Muthoot Finance's unsecured personal loan portfolio
Muthoot Finance is using its gold loan franchise to diversify into unsecured lending.
The company has built an unsecured personal loan portfolio of around ₹4,000 crore, focusing on existing gold loan customers instead of acquiring entirely new borrowers.
India's consumer durable finance market is expected to grow at a 20-22% CAGR through 2029, driven by aspirational population in tier 2 and 3 cities and deeper penetration of formal banking credit.