How Have GST Cuts Influenced Retail Credit Demand in Auto and Consumer Durables?
Click to start listening
Synopsis
Discover how the recent GST adjustments have revitalized the retail credit market, enhancing affordability and consumer confidence. With a notable rise in the Credit Market Indicator and burgeoning demand for auto and consumer durable loans, this report reveals the evolving landscape of retail finance in India.
Key Takeaways
- GST rationalization has bolstered retail credit demand.
- The CMI increased to 99 in Q2FY25.
- Consumer durable loan demand surged significantly.
- New borrowers grew by 5 percent year-on-year.
- Lenders should focus on targeted strategies for evolving borrower needs.
New Delhi, Dec 15 (NationPress) The recent adjustments in the Goods and Services Tax have significantly enhanced the retail credit landscape, leading to improved affordability. This is evidenced by the rise in the Credit Market Indicator (CMI) to 99 in Q2FY25, up from 98 in the previous quarter, according to a report released on Monday.
The surge in retail loan applications reflects a revival of consumer trust and positivity in the market, as noted by the report from TransUnion CIBIL.
The demand component of the CMI increased to 95 for the quarter ending September 2025, a rise from 93 in the same quarter the previous year, primarily driven by financing for vehicles and consumer goods.
The daily average indexed demand for consumer durable loans leaped to 189 in October 2025, compared to 128 in October 2024. Additionally, demand for two-wheeler loans increased to 272 from 249, while auto loan demand rose to 133 from 115, the report revealed.
Moreover, the supply component of the CMI reached 97 in the third quarter of 2025, up from 91 in the same period of 2024, primarily fueled by loans for consumption (excluding credit cards) and gold.
The provision of credit through secured assets such as home loans, auto loans, and consumer durable loans exhibited positive growth in the September 2025 quarter, despite a decline in the previous year.
Notably, semi-urban and rural areas contributed to 61 percent of the total credit supply for the quarter.
“This presents a favorable opportunity for lenders to target areas with robust supply while also assessing regions with slower growth to uncover potential challenges,” said Bhavesh Jain, MD and CEO of TransUnion CIBIL.
There was a 5 percent year-on-year increase in new borrowers in the quarter ending September 2025, with borrowers under 35 experiencing a 12 percent growth.
“Lenders should leverage these developing segments by crafting tailored lifecycle strategies to meet the changing financial needs of borrowers,” Jain emphasized.
While the overall asset quality remains steady, recent observations point to increasing stress in specific loan categories, such as micro-LAP and small-ticket housing loans.
Point of View
Reflecting increased consumer confidence. As lenders adapt to emerging market trends, it will be crucial to address the challenges in specific loan segments, ensuring a robust financial ecosystem.
NationPress
19/12/2025
Frequently Asked Questions
What is the Credit Market Indicator?
The Credit Market Indicator (CMI) is a measure that reflects the overall health and demand in the credit market, indicating consumer confidence and borrowing trends.
How has GST affected retail credit?
GST adjustments have made retail credit more affordable, leading to increased demand for loans, particularly in the auto and consumer durable sectors.
What demographic is showing growth in borrowing?
There has been a notable 12 percent increase in borrowers under the age of 35, reflecting a shift in the borrowing landscape.
