Retail Credit Expansion Slows as Personal Loans and Card Usage Drop

India’s retail credit segment has shown signs of a slowdown, with personal loan disbursements and credit card spending recording a sharp decline. Recent data indicates that consumer borrowing appetite has weakened, raising concerns about overall demand in the economy. Industry analysts note that the dip in credit card transactions reflects a cautious approach from households as they rein in discretionary spending. At the same time, banks have tightened lending standards for unsecured loans, leading to a fall in new personal loan approvals. The decline comes after a period of sustained double-digit growth in retail credit, which had been a key driver for the banking sector. Experts believe that rising interest rates, combined with inflationary pressures, are impacting consumers’ ability and willingness to borrow. While the slowdown may pose short-term challenges for lenders, regulators suggest that it could help cool excessive reliance on unsecured credit. This may bring balance to the sector and reduce long-term financial risks.