Borrowing Boom: 46% take loans for Phones, EMI Cards power 65% of credit

57% of borrowers shop online, with women (66%) surpassing men (55%), highlighting how digital convenience is empowering women to manage household purchases and finances independently

India’s borrowing landscape is undergoing a dramatic shift, with 46% of consumers now taking loans to buy smartphones and home appliances, 25% borrowing to start or expand a business, and digital loans overtaking physical channels for the first time at 51%, according to Home Credit India’s latest How India Borrows 2025 study. The report, covering borrowers across 17 cities, also finds that 65% now prefer EMI cards, 49% show high confidence in embedded finance solutions, and 84% remain worried about excessive data collection even as digital usage hits record highs.

 

The most common near-term purposes for borrowing are starting or expanding a business (34%) and buying a home (28%), highlighting India’s dual ambition of economic mobility and home ownership.

 

 

Men (35%) are more focused on business expansion, while women (33%) prioritise home buying. Gen Z emerges as the most aspirational cohort, with 35% trying to start a business along with 32% aiming to buy a home. In terms of aiming at home ownership, Gen Z is ahead of both Millennials and Gen X. Metros (32%) show higher intent for home ownership, whereas Tier 1 cities (37%) lean toward entrepreneurship. East India (44%) leads in entrepreneurial ambition, especially Patna (52%) and Ranchi (47%). Among metros, Delhi NCR (37%) stands out for home-buying intent, while Jaipur (42%) and Bengaluru (41%) reflect higher debt caution. Secondary goals include children’s education (13%) and home renovation (11%), while discretionary purposes such as international travel (1%), purchasing 4 wheelers (6%) and 2 wheelers (4%) and lifestyle upgrades (2%) remain limited, reflecting a pragmatic borrowing mindset.

 

Encouragingly, the perception of credit as a tool of empowerment continues to grow. 51% of respondents say loans have helped them achieve goals otherwise out of reach, with the sentiment strongest in Tier 2 towns (54%) and cities such as Ludhiana (58%), Bhopal (56%), Dehradun (56%), Jaipur (55%), and Patna (52%). Two-thirds (65%) view loans as a stepping stone to major life goals such as education, housing, and entrepreneurship, led by Gen Z (68%) and Tier 1 cities (67%), with Mumbai (70%) topping metros. However, women (42%) are more debt-averse than men (35%), indicating greater financial caution.

 

EMI cards remain the most widely used lending instrument, preferred by 65% of borrowers, marking a 22-basis-point rise year-on-year.

 

In 2025, 51% of borrowers preferred taking loans online, marking a 10 percentage-point increase from last year and surpassing POS and bank visits (30%) as the primary mode of borrowing. This trend is strongest among Millennials (54%) and Gen Z (50%), underscoring the comfort and confidence of younger, tech-savvy consumers in navigating digital credit journeys.

 

Tier 1 cities are now leading India’s digital borrowing wave, signalling the rapid penetration of technology beyond metros. North India leads overall with 59% of borrowers opting for online channels, followed closely by the West, where Pune and Ludhiana each record 64% digital uptake. Chandigarh (42%), Bengaluru (41%), and Ahmedabad (41%) emerge as the top digital-loan cities, while Mumbai (22%), Lucknow (27%), and Jaipur (27%) show slower adoption.

 

Trust continues to be the cornerstone of credit decisions. Two-thirds (66%) of borrowers prefer credible lenders even at higher EMIs — a sentiment strongest among Millennials, metro and Tier 1 audiences. Interest rate sensitivity is led by Millennials (48%), while men (46%) prioritize EMI affordability and women (46%) rely more on personal advice. Millennials (47%) and Gen X (46%) remain slightly more affordability-driven than Gen Z (43%).

 

Aspirational Borrowing Takes Centre Stage

 

The study reveals how digital connectivity and home upgrades have become central to households’ quality of life. But the biggest structural shift lies in the rise of business-led borrowing:

 

• 25% of borrowers use credit to start or expand a business, up from 21% last year.
• 34% plan to borrow for business expansion over the next 1–2 years.
• 28% plan to borrow to buy a house, marking rising homeownership ambitions.

 

Other targeted uses include:

 

• 12% for home renovation/construction
• 4% for education
• 4% for vehicle purchases
• 2% for marriage expenses

 

The lower-middle-income borrower “is moving from borrowing for survival to borrowing for upward mobility,” said Ashish Tiwari, CMO, Home Credit India. 

 

The report signals a dramatic shift to mobile-led finance:

 

Digital usage penetration

 

• 65% use mobile banking
• 57% shop online
• 46% use internet banking
• 57% seek financial education

 

Digital adoption is highest among:

 

• Women for online shopping (66%)
• Gen Z for online commerce (65%)
• Millennials for mobile banking (67%)
• Cities leading the digital wave:
• Delhi NCR (83%), Kochi (74%), Chennai (73%) for mobile banking
• Kolkata (74%), Patna (68%) for e-commerce
• However, even top financial hubs such as Mumbai (39%) and Bengaluru (39%) show lower internet banking penetration—proof that infrastructure alone does not guarantee adoption. 

 

What Borrowers Consider Before Taking a Loan

 

Indian borrowers are far more analytical than before, prioritising affordability and trust over speed alone.

 

Top pre-loan considerations

 

• 46% check EMI affordability
• 33% depend on family/friend recommendations
• 31% check credit scores
• 29% check online reviews
• 10% use loan comparison apps

 

Key product features

 

• 46% look at interest rate & total repayment
• 38% prefer quick disbursal
• 37% want flexible closure
• 66% prefer credible lenders even at higher EMIs
• Credit score awareness is highest in Bengaluru (70%) and Chennai (60%).

 

India’s Big Shift: Click-First Credit

 

For the first time, digital loans (51%) have overtaken physical channels (30%) as the preferred way to borrow.

 

Who prefers digital?

 

• Millennials (54%)
• Gen Z (50%)

 

Top digital-loan cities:

 

Pune (64%), Ludhiana (64%), Chandigarh (42%)

Slower adopters: Mumbai (22%), Lucknow (27%), Jaipur (27%)

 

Emerging Finance: Embedded Credit and EMI Cards Surge

 

The HIB study shows a sharp rise in tech-integrated finance:

 

• 49% of borrowers show interest in embedded finance (credit inside apps/platforms).
• 65% prefer EMI cards—the most popular lending instrument today.

 

Embedded finance is particularly popular among:

 

• Gen Z (58%)
• Women (51%)
• Metro users (50%)

 

Regional leaders:

 

South zone adoption up 32 percentage points to 49%

Chennai (55%), Bengaluru (52%), Hyderabad (50%)

 

Borrowing for India’s Future: Entrepreneurship & Homeownership

 

Borrowing intentions for the next 1–2 years underline a clear aspirational shift:

 

• 34% plan to borrow to start/expand a business
• 28% want to borrow to buy a home
• 13% for children’s education
• 11% for home renovation

 

Gen Z is India’s most ambitious cohort:

• 35% want to be entrepreneurs
• 32% want to buy a home
• East India, especially Patna (52%) and Ranchi (47%), shows the highest entrepreneurial intent. 

 

Credit as Empowerment: A New Psychological Shift

 

A majority now view loans as a stepping stone—not a burden:

 

• 64% say credit makes modern living accessible
• 59% say it improves quality of life
• 51% say loans help achieve goals otherwise out of reach
• 65% link credit directly to life milestones like homeownership, education, and entrepreneurship

 

Data Safety Concerns Remain a Blind Spot

 

Despite heavy digital adoption, understanding of data privacy remains low:

 

• 84% worry about excessive data collection
• 55% say loan apps collect more data than needed
• Only 27% understand how lenders actually use their data
• Just 23% fully understand data privacy rules (up 10 percentage points from last year)

 

Cities with strongest privacy awareness:

 

Ludhiana, Bengaluru, Ranchi, Kochi, Hyderabad

 

Who Was Surveyed?

 

• Ages 18–55
• Across 17 major cities (metros, Tier 1 & 2)
• Average age: 33 years
• Average monthly income: ₹34,000
• 83% male, 17% female respondents