Credit boom shows cracks: Rising defaults in cards, personal, auto loans

India’s credit market is riding a wave of record growth, but cracks are starting to show. Experian’s latest Credit Insights report warns of rising delinquencies in credit cards, personal loans, and two-wheeler loans — a potential sign of stress that could intensify if macroeconomic conditions tighten. While total Assets Under Management (AUM) surged to ₹121 lakh crore in March 2025, the data suggests lenders and policymakers will need to balance growth with risk management.

 

For everyday borrowers, this means one thing: it’s time to review your debt habits and prepare for a less forgiving credit environment.

 

As of March 2025, Industry Assets Under Management (AUM) stood at Rs.121 lakh crore, reflecting a 21% year-on-year (YoY) increase and a 4% quarter-on-quarter (QoQ) rise. Fresh disbursals during the quarter reached Rs.16 lakh crore, up 10% YoY and 8% QoQ, largely driven by continued growth in gold loans, business loans, and loans against property (LAP), shows data analysed by Experian, a global data and technology company.

 

 The secured lending landscape witnessed a surge, with loans accounting for 32% of originations by count in Q4 FY25. The segment also witnessed stable average ticket sizes at Rs. 1.7 lakh.

 

Unsecured lending grew 9% QoQ, led by a 22% QoQ rise in the business loan portfolio. Personal loans continued to dominate the unsecured segment in both volume and value. Overall, both personal loans and gold loans are showing a shift towards higher ticket sizes.

 

Credit card disbursals, however, showed a declining trend in Q4 FY25, with a 2% QoQ reduction in the credit card sourcing. This may indicate a shift in consumer spending patterns or cautious issuer sentiment. Rising delinquencies in credit card and two-wheeler loans continue to warrant monitoring.

 

Lender dynamics also shifted during the quarter. Public Sector Banks (PSBs) increased their share in home and gold loans, while Non-Banking Financial Companies (NBFCs) strengthened their presence in the LAP and used car loan segments. NBFCs also expanded their footprint in unsecured lending, particularly in personal and consumer durable loans.

 

Key Highlights:

 

1. Home Loans

 

• AUM stood at Rs 38.5 lakh crore as of March 2025, reflecting a 15% YoY growth.
• Net 90+ delinquency remained stable at 0.2%, indicating strong credit performance
• Public sector banks (PSBs) increased market share in disbursal from 42% to 49% YoY in Q4 FY25, reinforcing their strong momentum in the segment. 

 

2. Credit Card:

 

• AUM stood at Rs. 4.7 lakh crore as of March 2025, reflecting a 29.3% YoY growth.
• Credit cards are facing a consistent decline in issuance, indicating signs of changing consumer behaviour.
• Net 90+ delinquency reduced to 2%, maintaining growth but face persistent delinquency pressure.

 

3. Personal Loan:

 

• AUM stood at Rs. 15 lakh crores as of March 2025, reflecting a dip of 12% YoY.
• Although there is some stress in the personal loan portfolio, due to policy refinement we are seeing encouraging signs of improvement in early delinquency trends. Private sector banks (PVT) increased their market share in disbursals from 28% to 30% YoY in Q4FY24

 

4. Loan Against Property (LAP)

 

• AUM rose to Rs. 12 lakh crores, marking 24% YoY growth, reflecting a strong demand in the secured lending space.
• Net 90+ delinquency reduced to 0.3%, reflecting improved repayment trends
• NBFCs and housing finance companies (HFCs) increased market share from 48% to 50% YoY in Q4 FY25.

 

5. Gold Loans

 

• Gold loan continues its growth trajectory with AUM rose to Rs. 8 lakh crores in March 2025, reflecting 50% YoY growth.
• Net 90+ delinquency remained low at 0.1%, showcasing strong borrower repayment behavior.
• Public sector banks (PSBs) increased market share from 39% to 41% YoY in Q4 FY25.

 

6. Auto Loans

 

• AUM for auto loans reached Rs.8.1 lakh crore in March 2025, reflecting an 18% YoY growth.
• Net 90+ delinquency remained at 0.3%, a slight uptick during the same period.
• Private banks and NBFCs maintained a steady market share, demonstrating continued confidence in auto loan financing.

 

Where the Stress Is Building Up

According to Experian’s latest analysis:

 

Credit card delinquencies have inched up, suggesting some customers are finding it harder to pay balances on time.

 

Personal loan defaults—often unsecured and high-interest—are also ticking higher.

 

Two-wheeler loans, a popular financing option in smaller towns and semi-urban areas, are showing strain as well.

 

Delinquencies creeping up in credit cards, personal loans, and two-wheeler loans don’t just impact banks—they can affect your interest rates, access to credit, and financial resilience. If you act early—by cutting high-cost debt, building savings, and using credit wisely—you can stay financially secure, even if the lending environment gets tougher.