Datanomics: Housing, gold loans drive household debt to a decade high

RBI has cautioned that global shocks, including the West Asia conflict, could weaken borrowers' repayment capacity despite stronger household credit profiles in FY26

The Financial Stability Report released by the Reserve Bank of India (RBI) warned that economic shocks or the conflict in West Asia could hurt borrowers' repayment ability, urging banks to closely monitor retail loans. However, the scenario was different till the third quarter of financial year 2025-26 (Q3FY26). While household debt rose to over a decade high of 47.8 per cent of gross domestic product (GDP) at the end of Q3FY26 — driven by housing, vehicle, and gold loans — the proportion of borrowers with high repayment capacity also increased to 72 per cent in FY26 — compared to 69.4 per cent in FY25, and 60.6 per cent six years ago — mitigating immediate risks. But now, external developments such as the seemingly unending West Asia conflict may impact borrowers' repayment capacity. 

RBI