Indian household borrowing is undergoing a noticeable shift, with secured loans gaining ground while some forms of unsecured retail credit lose momentum, according to the latest Reserve Bank of India data. Loans against gold jewellery have surged in percentage terms, helped in part by a favourable base effect, while credit card dues and consumer durable loans have expanded only marginally. The trend points to a more cautious borrowing pattern among households, even as overall bank credit continues to rise.
Secured Credit Gains Ground
The clearest signal in the data is the rapid expansion of gold-backed lending. Loans against gold jewellery rose sharply over the period under review, reflecting both stronger demand for quick-access credit and the appeal of collateralised borrowing in an environment where households may be managing cash flows more carefully. Gold loans are typically faster to disburse than many other retail products and often carry lower credit risk for lenders because the loan is secured against an asset with readily observable value.
The rise also appears to be amplified by a low base, which can make percentage growth look especially strong. Even so, the direction of travel is significant. When households prefer to pledge jewellery rather than rely on unsecured credit, it suggests a preference for borrowing that is easier to obtain, more predictable in cost, and less dependent on credit scoring or income documentation.
Unsecured Retail Slows
By contrast, credit card dues and consumer durable loans have shown relatively weak growth. That matters because both categories are closely tied to discretionary spending. Credit card balances often reflect short-term consumption, while consumer durable loans are linked to purchases such as appliances and electronics. Slower growth in these segments suggests that households may be delaying non-essential spending or becoming more selective about taking on revolving and instalment-based debt.
The moderation in credit card dues is particularly notable because this segment has been one of the more visible engines of retail credit expansion in recent years. A slowdown does not necessarily imply stress, but it does indicate that the pace of consumer borrowing is no longer as broad-based as before. In a higher-rate environment, or amid uneven income growth, borrowers may be more sensitive to the cost of carrying balances on cards or financing purchases through instalments.
Consumer durable lending, meanwhile, tends to move with household confidence and retail demand. Its subdued growth may reflect a combination of cautious sentiment, tighter underwriting by lenders, and a shift in consumer priorities toward essential spending. Together, the two categories suggest that unsecured retail credit is losing some momentum relative to secured alternatives.
Personal Loans Still Drive Growth
Despite the cooling in some retail categories, personal loans continue to grow and remain a substantial contributor to overall bank credit. That is important because personal loans are among the most flexible forms of borrowing and are often used for a wide range of purposes, including medical expenses, education, travel, debt consolidation and other household needs.
The continued expansion of personal loans indicates that demand for credit has not weakened uniformly. Instead, borrowing is being reallocated across product types. Households may be substituting toward loans that offer quicker access or more favourable terms, while lenders appear to be balancing growth with risk management. The result is a credit market that is still expanding, but with a more pronounced tilt toward secured lending.
Bank credit overall rose markedly in the latest data, underscoring that lending activity remains healthy even as the mix changes. The composition of that growth, however, is telling. A stronger share of secured borrowing generally points to greater caution among borrowers and lenders alike. It can also reflect a preference for products that are easier to approve and cheaper to price when collateral is available.
For banks and non-bank lenders, the shift has implications for portfolio strategy. Gold loans and other secured products may offer steadier growth and lower credit losses, but they can also be more sensitive to collateral values and operational execution. Unsecured retail lending, while often more profitable on a risk-adjusted basis when credit quality is strong, may face slower demand if households become more conservative.
The RBI data therefore captures more than a simple change in loan volumes. It reflects a broader behavioural shift in Indian household finance: consumers are still borrowing, but increasingly on terms that reduce risk and improve access. That may be a sign of prudence, but it also suggests that the next phase of retail credit growth could be narrower, more collateral-driven and less dependent on discretionary consumption.