India’s Gen Z is being celebrated as part of an “Aspirational India” — young consumers entering the formal credit system, taking loans for education, two-wheelers, smartphones, emergencies and small businesses.
But beneath the credit-growth numbers lies a more complicated story.
In this audio, Sucheta Dalal examines India’s rapidly expanding consumer credit market and asks an important question: when does financial inclusion become over-indebtedness?
Credit bureau data shows younger borrowers accounting for a growing share of new borrowing, while multiple-loan borrowing and over-leveraging are also rising. Moneylife Foundation’s counselling work reveals how seemingly small digital loans can accumulate into unsustainable repayment obligations.
The audio explores:
• The rapid expansion of credit among Gen Z and young Indians
• Why “loan stacking” is becoming a concern
• How small digital loans can turn into large household liabilities
• The difference between disclosed interest rates and the actual cost of borrowing
• Why a borrower’s income alone does not determine loan affordability
• What RBI’s digital lending framework addresses — and what it may not
• Why credit bureaus need to look beyond defaults to identify financial stress earlier
• The crucial shift from disclosure to suitability and affordability
Credit can undoubtedly create opportunities — from financing education and productive assets to supporting small businesses and gig workers.
But speed and accessibility do not automatically make borrowing affordable.
The real question is whether India’s credit boom is helping young borrowers build financial security, or simply allowing them to spend tomorrow’s income today.
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