New loan originations growth slows to 5% in Q4 FY25: Cibil
The domestic retail credit market demand continued to moderate in the last quarter of fiscal 2025, led by a slower growth in new loan originations, says a report.
The slowing of credit demand from younger consumers was evident from the fall in the share of enquiries from those aged 35 years or younger to 56 per cent for the quarter ending March 2025, down from 58 per cent in the quarter ending March 2024.
'India's retail credit market continued to see a softening in the last quarter of the 2024–25 financial year as new loan originations (partly a measure of credit demand and partly a measure of supply) grew at a slower rate of 5 per cent year-over-year (YoY) in March 2025, compared to 12 per cent in March 2024,' according to TransUnion CIBIL's June 2025 Credit Market Report.
This and other factors pushed the Credit Market Indicator (CMI) to a two-year low of 97, the report showed.
The slowdown in credit demand comes even as the Reserve Bank of India (RBI) reduced the repo rate by 25 basis points to 6.25 per cent in February 2025 policy.
The muted demand was more pronounced among consumers 35 years old or younger. Consequently, the share of New-to-Credit (NTC) consumers that lenders supplied decreased by three percentage points during the same period, given that a large share of younger consumers constitute the NTC segment.
'The slowing down of credit demand, especially among younger borrowers, is reflected in the easing in demand for consumption loans, which is typically the choice of products for younger borrowers,' said Bhavesh Jain, MD and CEO, TransUnion CIBIL.
However, signs of improving credit performance emerged, particularly through consistent month-over-month declines in credit card delinquencies from January to March 2025.
Credit demand in rural and semi-urban areas seemed to have weathered the demand moderation better. Enquiry volumes in rural areas and semi-urban areas increased to 52 per cent for March 2025 quarter, from 49 per cent in the year-ago quarter.
In contrast, enquiry volumes in urban areas and metro areas dipped to 48 per cent for March 2025 quarter, down from 51 per cent last year in the same quarter.
The report said that across all other loan products, with the exception of personal loans, the growth in volume was lower than the growth in value, which indicates a preference for higher value loans.
The increases in the share of high-ticket home and two-wheeler loans indicates a preference among lenders for loans backed with high-value assets. Home loans above Rs 1 crore grew 9 per cent year-over-year (YoY) during March 2025 quarter, compared to a negative growth of (-)7 per cent year-on-year for the entire home loan segment.
The report showed that balance-level delinquencies improved for consumption-led credit products on a quarter-over-quarter (QoQ) basis, indicating the easing of stress levels in these loan segments. The 90+ days past due balance level delinquency rate for credit cards stabilized at 2 per cent as of March 2025, against 2.04 per cent as of December 2024 and 2.02 per cent as of September 2024, marking the first QoQ improvement in the past four quarters.
Similarly, the delinquency rate for personal loans was at 1.14 per cent as of March 2025, against 1.34 per cent as of December 2024 and 1.37 per cent as of September 2024.
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