India’s retail credit landscape is entering a new phase, with housing loans poised to become the primary growth engine, according to a Bernstein report released on July 11, 2025. The shift marks a transition from borrower expansion to deeper credit penetration per individual.
Key Highlights
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Credit per borrower is expected to rise significantly, led by affordable mortgages offering around 3 percent Return on Assets.
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Mortgages currently account for just 11 percent of India’s GDP, far below China’s 30 percent and developed markets’ 50 percentplus levels.
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Bernstein estimates a USD 1.5 trillion mortgage opportunity by FY35, driven by rising incomes and urbanization.
Structural Drivers
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Over 200 million new borrowers entered the formal credit system in the past decade, but future growth will hinge on increasing loan sizes.
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Affordable housing is central to this expansion, with lenders needing scalable models across states to tap the opportunity.
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Nonmortgage retail credit already exceeds 30 percent of GDP, indicating saturation in unsecured lending segments.
Challenges and Opportunities
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Success will depend on lenders’ ability to replicate operational efficiency across geographies.
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Mortgage penetration remains low despite government schemes and falling interest rates, suggesting untapped potential.
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The report emphasizes that deeper credit per borrower is more sustainable than expanding borrower base alone.
India’s retail credit story is evolving—from quantity to quality, and housing loans are set to lead the charge.
Sources: WebIndia123, Tribune India, Economic Times, Bernstein.