Consumer loans have reached record levels in the first quarter.
On one hand, there has been a huge increase in the prices of gadgets like TV, fridge and smartphones in the last few months. On the other hand, there has been an increase in the purchase of these goods. Due to which a new record has been seen in consumer financing in the June quarter. Data from the Reserve Bank of India (RBI), market research companies and other companies show that this increased its share in total retail sales. In fact, consumers took more loans to cope with the sharp rise in prices and economic uncertainty.
According to the report, the reason for this increase was more financing for consumer electronics like smartphones, televisions, laptops and air-conditioners. The companies had increased the prices of these things by 12-40 percent in the last six months. This was done to compensate for the increased commodity costs and huge increase in memory chip prices due to the West Asia crisis.
Increase in consumer loans
ET’s report has cited data from credit information company Equifax India. It is said that in this financial year till May, the outstanding of consumer durable loans from banks and non-bank financial companies (NBFCs) increased by 9.2 percent to Rs 1.19 lakh crore, which was Rs 1.09 lakh crore till March. Latest RBI data shows that consumer loan outstanding of banks increased by 4.3 per cent to Rs 22,906 crore at the end of May compared to March, which was a recovery after a decline of 5.3 per cent in FY26.
At the end of May, the credit card outstanding of banks increased by 1.3 percent on an annual basis to Rs 2.95 lakh crore, although it remained almost the same as in March. The data for June is yet to come. The central bank said on Tuesday that consumer durable loans of upper and mid-tier NBFCs, including housing finance companies, increased by 42 per cent year-on-year to Rs 68,814 crore in FY 2027 at the end of May. This data covers 87 percent of the NBFC sector.
tightened rules
Nilesh Gupta, director of electronics retail chain Vijay Sales, said in an ET report that the average financing time has increased by about three months this year. Although consumer finance has now spread to smaller cities, a major challenge is that some consumers are not able to get approval because NBFCs have tightened their lending rules. This trend was also seen in lenders. Bajaj Finance, India’s largest NBFC, disbursed 16.4 million loans in the June quarter, up from 13.9 million in the festive December quarter. The number of new loans increased by 22 percent on an annual basis. Industry officials say the expansion of NBFCs in smaller cities is also giving a boost to consumer financing, which was earlier a sector dominated by banks.
Smartphone market under pressure
According to smartphone market researcher Counterpoint Research, despite a decline of about 11 percent in total smartphone sales in the June quarter, the share of sales through financing increased from 35 percent to 40 percent. Tarun Pathak, Research Director, Counterpoint Research, said in the report that the smartphone market is under pressure and is expected to grow further, hence financing is emerging as the main means of purchase. Now about 67 percent of smartphones sold through financing are financed through NBFCs.
Trend of payment through credit increased
Kailash Lakhayani, Chairman of All India Mobile Retailers Association, said that financing has increased in general trade. There has been an increase of 20-23 percent year-on-year in the June quarter, due to which the trend of payment is through credit instead of cash. Electronics brands have extended the financing period to keep the monthly installments affordable. The financing period for smartphones has been increased from 12 months to 15 months, while the financing period for TV, laptop, AC and refrigerator has been increased from 18 months to 24 months.
