Will NBFCs Drive the Consumption Credit Landscape?

If NBFCs succeed in striking a balance between growth impulse and diligence, they could well become the force to reckon with in financing India's consumption story.

- VISHAL KAMPANI, Vice Chairman & MD, JM Financial

AMIDST THE U.S. TARIFF levy, a consistent rise in customer spending has emerged as a resilient growth engine for India. The data mentioned in a recently released report by the Ministry of Finance reflects that underlying theme. According to the report, the share of private consumption in nominal GDP rose to 61.4% in FY25 from 60.2% in FY24. The report projected a positive growth outlook as well. According to the report, the share of ‘Middle India’ i.e. households with annual income of ₹2-10 lakh is expected to steadily increase—from 103 million middle-income households in FY22 to 181 million by FY30. Buoyed by all these catalysts, including growing consumerism, India is steadily progressing towards emerging as the world's consumption capital. The scale, speed, and evolution of the credit ecosystem will give a further flourish to the consumption story.

The evolving borrowing habit adds to the vibrant credit ecosystem in the country. Be it buying a home, owning high-end smartphones or booking vacation packages, people now have developed a certain comfort level while opting for borrowing. Recent data from GlobalData's Global Retail Banking Analytics shows that consumer loan values in India surged by 27.6% owing to rising incomes and shifting spending patterns. Even in the middle of a challenging global and domestic environment, the value of consumer loans grew approximately 8.3% in 2024 to reach $690.5 billion. Consumption lending now accounts for about 54% of the total lending market, according to CRIF Highmark.