Datanomics: Gen Z embraces credit, struggles to keep pace with repayment

Gen Z's access to credit is rising rapidly, but the group also records the highest delinquency rate, raising concerns over repayment capacity.

Finance Minister Nirmala Sitharaman recently asked public sector banks (PSBs) to build long-term relationships with the youth. The announcement came alongside a month-long “Banking for Youth” campaign for individuals aged 16 and above, which is set to launch on October 2. The campaign aims to build customer relationships across different life stages, from campus to career and beyond. Credit penetration among 18-25-year-olds rose sharply — one in seven young adults had access to credit in 2024, up from about one in eleven three years earlier. Younger consumers increasingly use credit for consumption-led purchases, with consumer durables, credit cards, and two-wheeler loans being the preferred categories. Notably, Gen Z’s default rate remains the highest of any age group: 30-plus-day delinquency among these borrowers stood at 2.9 per cent in 2024 and 2.7 per cent in 2025, raising questions about whether the upcoming initiative can help borrowers keep pace with repayment.