Nithin Kamath, the founder and CEO of Zerodha, has raised alarm over India’s growing borrowing habits, particularly in the segment of small-ticket personal loans and credit card borrowings. According to Kamath, aggressive marketing strategies by fintech apps have fueled this trend, with an increasing number of individuals taking loans they cannot afford. Kamath highlighted a disturbing uptick in defaults, particularly in the segment of low-income borrowers, stating, “The defaults among this segment that can’t afford to take loans are starting to increase.”
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Kamath referred to data from CRIF, which revealed that personal loans in India now total Rs 13.7 lakh crore. Public sector banks hold 38% of this debt, while private banks and NBFCs (Non-Banking Financial Companies) hold 33% and 24%, respectively. What has raised serious concern is the rapid rise of small-ticket loans—those under Rs 10,000—dominated by NBFCs, which now issue 94% of these loans. The share of NBFCs in new lending has risen significantly to 38.7% in FY25, compared to 33.2% the previous year.
Kamath emphasized the importance of managing personal finances and advised paying off high-interest loans, including credit cards, to avoid financial strain. He also pointed out the psychological toll of debt, explaining how being in debt can affect all aspects of life, from personal to professional.
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After the pandemic, there’s been a big increase in personal loans and credit card borrowings. The good side of this is the deepening of credit, but the bad side is some people seem to have borrowed too much or borrowed despite not being able to afford it. A lot of these are small… pic.twitter.com/tMFPTb1m8O
— Nithin Kamath (@Nithin0dha) January 22, 2025
Among borrowers with loans ranging from Rs 10,000 to Rs 50,000,
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