The number of people taking loans in the country and not repaying them on time is increasing rapidly, and the young generation i.e. Gen Z is seen to be at the forefront of this trend. Thousands of youth between 25 and 35 years of age are taking loans many times more than their monthly income. The situation is such that a loan of Rs 30 to 40 lakh is being taken on a salary of Rs 30 to 40 thousand. Due to which the EMI burden is increasing and default cases are also increasing.
Today, facilities like personal loan, credit line and buy now pay later have become very easy through mobile apps and fintech platforms. These small unsecured loans, available without guarantee and with less documents, provide relief in the beginning, but gradually create a mountain of debt. When the income cannot handle the increasing EMIs, people start taking new loans to repay the old loans. This sequence becomes the beginning of getting trapped in the debt trap.
What do the statistics say?
According to CIBIL report, Gen Z accounts for 41% of new credit takers. At the same time, the report of CRIF High Mark and UFF shows that by June 2025, more than 65% of those taking loans from NBFC-Fintech are youth of 26-35 years. The default rate is highest in small loans (less than Rs 50,000). About 26% of the loans are outstanding for more than 90 days. This indicates that consumption is increasing, but the ability to repay is not that strong.
More than 43 lakh cases of check bounce
There has also been a surge in check bounce cases in the country. According to the data, more than 43 lakh cases are pending. There is a provision of punishment up to two years for check bounce, but despite this the cases are not decreasing. Maharashtra tops the list, where more than 5.6 lakh cases are pending. Gujarat is at second place. The Supreme Court has recently issued guidelines such as WhatsApp notices and 20% interim payment for speedy disposal of cases.
Increasing NPA and credit card default
NPA of banks is also increasing. Default cases are being reported from big borrowers to credit card holders. The level of NPA in the micro loan and credit card sector is becoming worrying.
What is the lesson?
Experts believe that taking a loan is not wrong, but a loan taken without balancing income and expenditure can turn into a financial crisis. It is important for the young generation to maintain a balance between lifestyle expenses and debt, otherwise even small EMIs can cause a big financial crisis.
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