41% borrowers are Gen Z: Is hidden debt rising among young Indians?
India Today
A growing number of young Indians are turning to credit early in life. With Gen Z now making up 41% of borrowers, is this a sign of financial confidence or a warning of rising hidden debt? Let's find out.
If you think your friends in their 20s are just casually swiping cards for the latest gadgets, travel, or dinner outings, you’re not entirely wrong. But beneath those small, seemingly harmless transactions, a hidden risk is growing — one that financial experts are calling “silent debt.” Surprisingly, 41% of new borrowers in India belong to Gen Z, and experts warn that these young earners are shouldering more hidden liabilities than ever before.
Sachin Jain, Managing Partner at Scripbox, explains the shift in India’s borrowing landscape: "Younger earners in India experience a vastly different economic climate than their predecessors in the 1990s and early 2000s. Today, access to credit, social media, and better earning potential has created a 'Double Bonanza' for the youth," he explains.
What does this “Double Bonanza” mean? Simply put, young consumers now have easy access to credit cards, personal loans, and app-based EMIs. Coupled with exposure to global lifestyles through the Internet and social media, it’s no surprise that retail borrowing is on the rise. Phones, gadgets, online shopping, travel — these everyday luxuries are now frequently funded by credit.
Jain adds, “This surge in borrowing is reflected in the numbers: 41% of new borrowers are Gen Z, aged between 18 and 30. This cohort is driving faster consumption growth, helping merchants earn higher revenues and boosting e-commerce.”
Ramneek Singh Ghotra, Chief Growth Officer at Finvasia, defines silent debt as “multiple small, unsecured liabilities that don’t feel like traditional loans but collectively create repayment pressure, such as credit card balances, BNPL (Buy Now, Pay Later) dues, app-based EMIs, and personal lines of credit.”
“The main sources are credit cards, BNPL or ‘pay later’ products, digital micro-loans, and lifestyle EMIs. Credit card usage has surged with over 11 crore active cards, while BNPL growth continues to scale with ~Rs97,000 crore in digital credit disbursed in H1 FY25. BNPL and micro-loans are increasingly reported to credit bureaus, meaning they now affect formal credit histories and future access to larger loans,” says Ghotra.
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