The Evolution of Borrowing in India

From the late 1970s when HDFC first offered home loans, credit was a privilege cautiously accessed later in life. Today, the scenario has dramatically changed, with a significant shift towards younger borrowers entering the credit ecosystem much earlier.

The Shift in Borrowing Age

A study by Paisabazaar highlights a 21-year drop in the average age at which Indians avail their first credit product across three generations. This shift underscores the changing dynamics of income, access, and attitudes towards credit.

Changing Mindsets and Easier Access

With the advent of the Jan Dhan-Aadhaar-Mobile trinity and pre-approved credit products, borrowing has become more accessible. The study, analyzing over 10 million consumers, reveals that the 1990s-born individuals typically start borrowing by 25-28, often through unsecured products like credit cards and personal loans.

The Role of Disposable Income

K Cherian Varghese, a veteran banker, points out that the ability to borrow is closely linked to disposable income. The rise in decent salaries, especially in sectors like IT, has empowered younger individuals to manage expenses and EMIs effectively.

From Secured to Unsecured: The Credit Journey

The entry point into the credit system has evolved from home loans for the 1960s-born to auto loans for the subsequent generations, and now to unsecured products for the youngest borrowers. This reflects a broader trend towards instant gratification over prolonged savings.