India’s Borrowers Are Getting Younger: A New Study Reveals Changing Borrowing Trends

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A new study conducted by the financial products marketplace, Paisa-bazaar, has shed light on a fascinating trend in India’s financial landscape. It appears that a growing number of people in the country are taking out their first loans in their mid-20s, a significant shift from the previous generations. This shift in borrowing habits is particularly evident among those born in the 1990s who are currently in their early to mid-20s or early 30s. According to the study, they are securing their first credit products as early as 23 years of age. This article delves into the implications of this trend and explores the reasons behind this transformation.

A Generational Shift in Borrowing Habits

The study, which analyzed data from a staggering 37 million consumers, paints a clear picture of the generational shift in borrowing habits. Those born in the 1990s, often referred to as millennials or Gen Z, are accessing credit at a much younger age compared to their predecessors. The average age at which they take their first credit product, be it a personal loan or a credit card, is 23 years old. This finding is indicative of a significant change in the financial behavior of the younger generation.

In contrast, those born in the 1980s, currently in their early to mid-30s or early 40s, accessed credit for the first time at an average age of 28. Similarly, individuals born in the 1970s, now in their early to mid-40s or early 50s, took their first loans at an average age of 38. This clear divergence in the age at which different generations are beginning to engage with the world of credit is a noteworthy development.

The Factors Driving Younger Borrowers

Several factors contribute to this shift in borrowing habits among India’s younger population. Let’s explore some of the key drivers:

1. Increased Financial Awareness: The younger generation has grown up in an era of easy access to information and digital resources. This has led to greater financial awareness and literacy. As a result, they are more informed about the benefits and risks associated with borrowing.

2. Changing Aspirations: Younger Indians are increasingly aspirational and are eager to achieve their life goals and dreams at a faster pace. Whether it’s pursuing higher education, starting a business, or traveling, many millennials and Gen Z individuals are turning to credit to fulfill their aspirations earlier in life.

3. Easier Access to Credit: Financial institutions and fintech companies have made credit more accessible than ever before. The simplified application processes, quick approvals, and tailored lending products have made it easier for young individuals to access credit.

4. Rising Disposable Incomes: In recent years, India has witnessed an increase in disposable incomes among the youth. This has not only made them eligible for credit but has also given them the confidence to manage repayment obligations.

5. Technological Advancements: The proliferation of smartphones and the availability of user-friendly mobile applications have made it convenient for young borrowers to manage their financial affairs, from checking credit scores to making payments.

6. Peer Influence: The influence of peers plays a significant role in shaping financial behavior. Seeing friends and acquaintances successfully manage their credit may encourage others to follow suit.

Impact on Financial Institutions

The changing borrowing trends have implications for financial institutions, including banks and fintech companies. To cater to the evolving needs and preferences of younger borrowers, these institutions need to adapt and innovate in several ways:

1. Digital Transformation: Embracing digital technologies is crucial for financial institutions to provide a seamless and convenient borrowing experience. This includes online application processes, paperless transactions, and instant approvals.

2. Personalized Products: Tailoring lending products to the specific needs and preferences of younger borrowers can attract and retain this customer segment. Offering flexible repayment options and competitive interest rates is essential.

3. Financial Education: To ensure that younger borrowers make informed financial decisions, banks and fintech companies can play a role in providing financial literacy resources and education.

4. Risk Management: As younger borrowers may have limited credit histories, financial institutions need to develop effective risk assessment models to manage their credit portfolios prudently.

5. Regulatory Compliance: Staying compliant with relevant regulations is essential to protect the interests of both borrowers and lenders. Financial institutions must keep abreast of any changes in lending regulations.

The findings of the study by Paisa-bazaar reveal a fascinating shift in India’s borrowing landscape. Younger generations, particularly those born in the 1990s, are entering the world of credit at a remarkably early age, setting a new precedent in the country’s financial behavior. As they take their first loans in their mid-20s, it is essential for financial institutions to understand the driving factors behind this trend and adapt their strategies to cater to the changing needs of these younger borrowers. Moreover, the financial awareness and responsibility of these generations will likely play a pivotal role in shaping the future of India’s lending landscape

Disclaimer: The thoughts and opinions stated in this article are solely those of the author and do not necessarily reflect the views or positions of any entities represented and we recommend referring to more recent and reliable sources for up-to-date information.

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Ravindra Kirti is a well-rounded Marketing professional with an impressive academic and professional portfolio. He is IIM Calcutta alumnus & holds a PhD in Commerce, having written an insightful thesis on consumer behavior and psychology, which informs his deep understanding of market dynamics and client engagement strategies. His academic journey includes an MBA in Marketing, where he specialized in strategic management, international marketing, and luxury retail management, equipping him with a global perspective and a strategic edge in high-end market segments. In addition to his business expertise, Ravindra is also academically trained in law, holding a Master’s in Law with specializations in law of patents, IT & IPR, police law and administration, white-collar crime, and corporate crime. This legal knowledge complements his role as the Chief at Jurislaw Partners, where he applies a blend of legal acumen and strategic marketing. With such a rich educational background, Ravindra excels across a range of fields, from legal marketing to luxury retail, and event design. His ability to interlace disciplines—commerce, marketing, and law—enables him to drive successful outcomes in every venture he undertakes, whether as Chief at Jurislaw Partners, Editor at Mojo Patrakar and Global Growth Forum, Founder of CircusINC, or Chief Designer at Byaah by CircusINC. On a personal note, Ravindra Kirti is not only a devoted pawrent to his pet, Kattappa, but also an enthusiast of Mixed Martial Arts (MMA) and holds a Taekwondo Dan 1. This active lifestyle complements his multifaceted career, reflecting his discipline, resilience, and commitment—qualities he brings into his professional relationships. His bond with Kattappa adds a warm, grounded side to his profile, showcasing his nurturing and compassionate nature, which shines through in his connections with clients and colleagues. Ravindra’s career exemplifies versatility, intellectual depth, and excellence. Whether through his contributions to media, law, events, or design, he remains a dynamic and influential presence, continually innovating and leaving a lasting impact across industries. His ability to balance these diverse roles is a testament to his strategic vision and dedication to making a difference in every field he enters.