Borrowing behaviour of India’s lower-middle class, a segment representing nearly two-thirds of the population, has undergone a significant shift, a report by Home Credit India, titled ‘How India Borrows 7.0’, revealed.
This year’s study shows a marked transformation in borrowing behaviour and attitudes among this segment – from credit as a safety net for necessity to a catalyst for aspiration and self-reliance. Credit typically includes credit cards and personal loans.
Credit is increasingly being used to elevate living standards, invest in entrepreneurial ventures, and achieve long-term financial goals, reflecting their strategic and forward-looking mindset, according to the report.
The study provides in-depth insights into borrowing behaviour, digital adoption, loan decision drivers, financial aspirations and attitudes, revealing how India’s emerging middle class is leveraging smart credit as a tool to fund their aspirations and turn dreams into reality.
“How India Borrows 7.0 study reflects a shift in India’s credit culture – from borrowing for survival to borrowing for success,” says Ashish Tiwari, Chief Marketing Officer, Home Credit India. “Gen Z, Millennials, women, and smaller cities are leading the digital lending revolution, valuing speed, simplicity, and personalisation.
Top reasons to borrow
In 2025, the top reason for borrowing remains the purchase of smartphones and home appliances (46%), showcasing the importance of connectivity and comfort in everyday life.
However, a notable 25% of borrowers now seek loans for business expansion or start-ups (up from 21% in 2024), marking a significant rise in enterprise-led borrowing and signalling a confident move toward self-sufficiency and capital formation.
Other key categories of borrowing demonstrate targeted financial planning and responsible credit use, such as 12% for home renovation/construction (vs 15% in 2024), 4% for education loans (stable YoY), 2% for marriage loans (vs 5% in 2024), and 4% for vehicle loans (vs 6% in 2024).
Digital Adoption: Fuelling financial empowerment
Digital adoption has emerged as a central driver of financial empowerment, marking a decisive shift toward a tech-driven credit ecosystem. Women and youth are emerging as the proactive seekers of smart credit, driving digital learning and usage.
Metros and rising cities are setting new benchmarks in mobile-first finance, and digital literacy and trust are becoming the essential enablers for the next phase of India’s credit evolution.
The study finds that 65% of borrowers now use mobile banking, highlighting a growing comfort with digital transactions. Internet banking usage has climbed to 46%, with Gen Z (51%) and Millennials (49%) leading the charge. Cities such as Chennai (59%) and Delhi NCR (53%) record the highest usage, reflecting strong digital trust and maturity.
Interestingly, major financial hubs like Mumbai (39%) and Bengaluru (39%) lag, indicating that infrastructure alone does not guarantee adoption; consumer habits and trust play equally critical roles.
Credit as an enabler: From survival to success
The most common near-term purposes for borrowing are starting or expanding a business (34%) and buying a home (28%), highlighting India’s dual ambition of economic mobility and home ownership.
Gen Z emerges as the most aspirational cohort, with 35% trying to start a business along with 32% aiming to buy a home. In terms of aiming at home ownership, Gen Z is ahead of both Millennials and Gen X. Metros (32%) show higher intent for home ownership, whereas Tier 1 cities (37%) lean toward entrepreneurship.
The study surveyed borrowers aged 18–55 years across 17 major cities (Tier 1 & 2), covering diverse income groups and professions. The sample comprised predominantly males, with an average age of 33 years and an average monthly income of ₹34,000.
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