India's Household Debt Manageable at 41.3% GDP, But Reckless Lending a Risk: Experts

• India's household borrowing reached 41.3% of GDP by March 2025, up from a 38% five-year average, yet remains manageable compared to other emerging markets.
• Experts Dinesh Khara (former SBI Chairman) and Madan Sabnavis (Chief Economist, Bank of Baroda) warn that reckless lending practices could turn this credit growth into a significant financial risk.
• Lending patterns show 46% of household loans are for consumption, 36% for asset generation, and only 18% for productive endeavors.
• Concerns persist over unsecured loans, which account for 53% of retail slippages, and the vulnerability of below-prime borrowers to economic shifts.
• Despite risks, net household financial savings rebounded to 7.6% of GDP, and RBI stress tests project improved asset quality by March 2027, maintaining overall financial stability.

Why It Matters: India's rising household debt is manageable, but experts urge caution against reckless lending to ensure financial stability.