'Buy Now Pay Later' spending trend of young Indians is expanding credit market: Expert

The Indian credit market is currently hinged on expansion and the key driver of this growth, most apparently are  the young Indians. Driven by consumption, they believe in 'Buy Now, Pay Later' - a habit that fuels the lending markets. Because of this, despite a continuous rise in bank interest rates. the lending market is far from being stagnant. Till when is this growth trend likely to sustain? Financial Expert, Aditya Shah explains:

Republic: What is the size of the Indian lending market as of today?
Aditya Shah: The bank outstanding is at about 150 lakh crore of credit. 

Republic: What is the rate of bank credit growth in India?
Aditya Shah: The Indian market has witnessed credit growth in recent times. According to the Reserve Bank of India, as on Marcch 31, the credit growth was at 15 per cent.

Republic: Despite continuous rise in RBI repo rate, the credit market in India has been growing. what are the key reasons?

Aditya Shah: The system credit growth was at an all time low between 2018-2021 so therefore we are coming out of a low base. As the bank balance sheets clear out and the conomy continues to recover from Covid-19 shocks, the credit growth is strong.

Republic: Reports have pointed that India's credit market is expanding primarily because of youngsters. Why is that?
Aditya Shah: Young Indians are spending .They spend on descretionary products which is 'Buy Now Pay Later' concept. Unlike older Indians, who have maintained savings and investment as ways of managing their income, young Indians like to spend their money. This spending behaviour therefore, of the young professional Indians is driving the demand for credit.

Republic: In December, RBI has revealed India's bank credit growth is accelerating at 16.8 per cent; what are the key drivers?
Aditya Shah: The significant growth in credit can be attributed to retail loans driven by personal loans and credit cards are the key driver of this strong loan growth

Republic: How do you see the credit market growing from here? Will the rate hikes eventually slow down the credit market?

Aditya Shah: The credit market will grow in double digits in 2023.Then it will slow down in 2024.