Strong Growth in Personal Loans in India Despite Interest Rate Hike

Despite an interest rate hike, personal loans in India have shown robust growth, as revealed by a recent report from the Reserve Bank of India (RBI). The report highlights a significant increase in personal borrowings, with specific segments such as housing, auto, and education loans experiencing notable growth.

According to the RBI report, Indians took personal loans worth 40.13 lakh crore in March, marking a substantial 20.4% increase compared to February’s 33.33 lakh crore. Among the various types of personal loans, vehicle loans were in high demand, showing a significant growth of 23.4%, while housing loans increased by 15% and education loans by 16%.

The report suggests that the improved standard of living since the outbreak of the COVID-19 pandemic has contributed to the rise in loan distribution in India. Additionally, the passenger vehicle industry has witnessed record sales during the 2023 financial year, which may have driven the increased demand for auto loans. Despite the recent interest rate hike, borrowers seem to be undeterred, indicating a resilient borrowing trend in the face of rising lending rates.