In India, a new bracket of borrowers is driving an unprecedented credit growth in the country. These borrowers have increasingly premium demands, and younger consumers are leading the way. In India, personal loans make up around 30% of the total non-food credit, with home and auto loans comprising the majority. Meanwhile, the real estate sector is experiencing unprecedented developments, with residential properties priced above Rs 1.5 crore accounting for 30% of total sales across the country in 2022. Similarly, the automobile industry has witnessed a shift in preference, with domestic sales of utility vehicles outpacing those of passenger vehicles.
Bank employees and sales representatives have had to alter how they dress for work to meet the demands of this new bracket of borrowers. Rakesh Saxena, a bank relationship manager, has joined an online course to sharpen his English speaking skills. This decision came after a surge in loan applications for high-end homes and luxury cars over the past year, which necessitated him to meet with these customers more often. Real estate agent Rajan Chaudhary and automobile sales representative Sonu Kumar have also received instructions for wardrobe makeovers over the last six months.
However, behind the glitz and glamour of this credit growth lies the dark signs of skewed economic growth. In general, income levels have slipped, and this doesn’t point towards an economic comeback. Companies will now concentrate more on their relatively richer customers, leaving behind the less affluent ones.
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The three sales executives noted that this phase of credit growth has a lot of firsts, with people, not industries, leading it. Even economists and reports by industry bodies echo this observation. This shift is unlike anything seen before in India, and it has caught many people by surprise. The catch is that while some Indians are living swanky, others are not as fortunate, and this has led to a widening income gap. In summary, young Indians are driving credit growth by riding premium, but there’s a catch, and it’s something that needs to be addressed.
