Mumbai, Sep 24 (NationPress) The demand for retail credit in India’s semi-urban and rural areas has continued to surge during the April-June period this year, indicating a heightened level of consumption. This comes in contrast to the overall decline in credit demand from younger consumers (aged 18–35) during the same quarter, as per a report by TransUnion CIBIL released on Wednesday.

The recent cuts in RBI interest rates, alongside a reduction in Goods and Services Tax (GST) rates and increased spending driven by the upcoming festive season, are anticipated to enhance consumer spending and promote lending activity, the report highlights.

The credit market report indicates that the growth in loan originations for younger consumers has slowed to 6% during the quarter, down from 9% in the same timeframe last year.

This slowdown was partially offset by a remarkable 9% year-on-year growth in loan origination volumes from rural and semi-urban areas, showcasing stable consumption behavior beyond metropolitan regions.

The most notable growth in rural and semi-urban sectors was recorded in personal loans, which surged by 15% year-on-year, outpacing other major products in these areas, such as gold loans (7%) and consumer durable loans (9%).

“The credit landscape in India is undergoing a transformation marked by resilience in demand from semi-urban and rural areas, a strategic pivot towards secured lending, and stable portfolio performance. These trends reflect a maturing market focused on sustainable and inclusive growth,” stated Bhavesh Jain, MD & CEO of TransUnion CIBIL.

The proportion of demand from young consumers (aged 18-35 years) as a percentage of total demand has decreased to 56% in the April-June 2025 quarter, down from 58% during the same period last year.

Personal loans, consumer durable loans, and gold loans remained favored among this demographic, while credit cards experienced a year-on-year decline. The overall reduction in supply was particularly pronounced in metro and urban regions, where the share of young consumers in loan originations has dropped by 3% over the past two years. Supply is measured as originations by lenders.

Younger consumers typically embark on their credit journey with products that provide convenience, such as personal loans, consumer durable loans, or credit cards. As they navigate different life stages, there is often a natural transition towards secured, long-term credit options that align with their evolving needs, the report suggests.

“The recent decline in credit demand from this segment might indicate a more cautious approach. While this may be a temporary trend, it underscores the necessity of equipping young borrowers with the appropriate tools and support to navigate their credit journey confidently,” Jain remarked.

Lenders have a unique opportunity to capitalize on resilient growth segments, particularly in semi-urban and rural areas, where credit demand remains strong. By customizing products and outreach strategies for these markets and fostering responsible credit behavior among younger consumers, lenders can drive inclusive and sustainable growth.

Home loan origination volumes also saw a 2% year-on-year increase, contrasting with a 3% year-on-year decline for the same period last year. In monetary terms, home loan originations rose by 6% year-on-year for the quarter ending June 2025, slightly surpassing the 5% growth for the corresponding period of the previous year.

In the case of two-wheeler loans, origination volumes decreased by 1% in the quarter ending June 2025, compared to a 15% growth in the same period last year, while in value terms, two-wheeler originations exhibited a slower growth of 3% compared to 21% growth during the same period last year.

Similar to credit demand trends, the share of semi-urban and rural consumers in loan originations also experienced a marginal increase of one percentage point year-on-year to 61% for the quarter ending June 2025, according to the report.