Demand for BNPL and house loans is anticipated to increase in 2023; student loan demand might decline.

The current ” Retail Credit Trends” report showed how the expansion of the credit market in 2022 indicated a steady increase in bank credit throughout the year. According to the figures, both the quantity and amount of loans requested and approved have increased, showing that many individuals have turned to credit in order to satisfy their financial demands.

The report’s 2022 trends section stated that despite significant rate rises, “the demand for credit remained robust. Pent-up demand was met, which led to a successful year for home finance. The first line of credit, credit cards, became a necessity. Secured loans, like loans against FDs, have increased quickly, pointing to a credit-savvy borrower segment that performs its research before requesting financing.

According to Dev Ashish, founder of Stable Investor, “There was a robust resurgence in real estate demand given the growth in disposable income and low rates of house loans up until only a few months ago. Although the recent increase in loan rates has not yet had a significant impact on home demand, there may be some slowdown if loan rates continue to climb as a result of RBI rate rises in the coming months. Mortgage loan costs have already increased due to rate rises. Therefore, additional increases in loan EMI expenses might provide problems for rate-sensitive borrowers.

Even if the worry of inflation and a recession continues to consume their thoughts, investors are looking forward to an economic rebound in 2023. However, recent increases in the repo rate and other policy changes indicate that inflation is beginning to ease, which will motivate more individuals to apply for modest unsecured loans. Overall, one may anticipate that the credit sector will continue to do well, barring the impact of unanticipated macro variables like war or sickness that could suddenly upend the nation’s economy.

As the card-issuing businesses enticed credit-seeking clients with their “Buy Now Pay Later” plans, the credit card market has performed very successfully. Co-brand cards were introduced by banks and fintech companies jointly, and they soon entered users’ wallets. Many individuals used credit cards to keep up with the escalating costs of everyday essentials because of how rapidly prices grew owing to inflation.

According to data provided by, credit card disbursals increased by 103% while reward card issuance increased by 48%. While the usage of fuel cards increased by 22% to offset the effects of rising gas prices, the passion for premium cards remained unabated.

Money Mantra’s founder, Viral Bhatt, stated, “In my opinion, the BNPL market will grow more in the following years, especially in 2023. For young Indian millennials or first-time credit users who don’t have credit cards but want easy access to short-term borrowing, BNPL is the best option. Although it may seem alluring, you should read the tiny print and be aware of the consequences of making late payments. Overall, it’s the ideal plan for the cautious buyer.

Despite the widespread advice from financial experts to avoid purchasing a property, many Indians nevertheless harbour the hope of doing so before they are 40. Apart from that, government-backed subsidy programmes and more affordable loans were helpful until inflation started to pound on our doors, to which the Reserve Bank of India responded by raising the repo rate repeatedly.

The demand for house loans hasn’t decreased, despite rising lending rates. Even if many borrowers continue to bemoan higher EMIs or longer loan terms, according to RBI statistics, house loans climbed by 8.4% between March and October, outpacing the six months before that, when there were no increases.

“Buying a property is a big objective for most individuals,” stated Suresh Sadagopan, MD & Principal Officer, Ladder7 Wealth Planners. For the majority, it is almost difficult to purchase a home without a mortgage. Therefore, house loans will remain popular despite rising interest rates, and this trend is anticipated to continue in the coming years.

As real estate maintains its post-pandemic recovery, the category is anticipated to increase to $20 trillion at the present rate and maintain its share into the New Year. Many consumers have decided against applying for personal loans since there are too many little loans available. Although the demand for retail credit has returned to pre-pandemic levels, the demand for personal loans has significantly decreased since then.

As post-pandemic life takes shape, there will continue to be a strong demand for unsecured loans as individuals attempt to relaunch their enterprises, travel, shop, or purchase expensive products like cars or electronics. While an increase in small-ticket loan rates isn’t noticeable at the monthly EMI level, Ashish continues, “A lot will rely on how the employment market develops over the next few quarters. The demand for unsecured loans will increase if India continues to be a shelter for growth and there is no significant recession.

A small percentage of the retail credit market is made up of loans backed by fixed deposits, gold, equities, and bonds. However, they were markets that were growing quickly. As interest rates increased, Indians prudently borrowed, offering assets in return for reduced rates. Since the end of 2020, loans secured by fixed deposits have increased by 54% while loans secured by gold have increased by 58% during the same time frame.

According to the statistics, consumers have realised the benefit of utilising their assets as collateral to get loans, which enables them to get lower-cost loans. Borrowers have discovered a technique to obtain loans without losing their investments, as opposed to the prior behaviour of liquidating bank accounts, gold, and mutual fund investments. They only look for loans against assets, which enables them to gain from loans as well as returns on their investments.

Education loans continued to have the lowest growth in demand among retail loans. This may be attributed to the challenges students confront in getting access to education overseas. Sadagopan continues, “Education loans may be impacted by the rupee’s decline and the ensuing increase in education costs. Additionally, students will be much more circumspect and careful when considering studying abroad because a recession is coming in several nations, including the USA, Canada, the Eurozone, etc. As a result, the demand for student loans might decline soon.

Edited by Prakriti Arora