The Annual Shopping Frenzy Meets Easy Credit
The period from September to December marks India's biggest consumption spike, with festivals like Navratri, Dussehra, and Diwali driving a surge in spending. Retailers and e-commerce giants roll out their most aggressive offers during this time, from flat
discounts to cashback and exchange bonuses. For instance, major platforms have already announced 10% instant discounts on specific bank credit and debit cards for their upcoming mega sales. This year, however, these offers are landing in a financial landscape where credit is more accessible than ever. The convergence of high consumer sentiment, attractive deals, and the widespread availability of digital payment options is creating a potent cocktail for increased credit-based spending. Projections show online retail is expected to grow by a record 25% during this festive period.
The Digital Credit Revolution: BNPL and UPI
A key driver of this trend is the explosive growth of 'Buy Now, Pay Later' (BNPL) schemes. The Indian BNPL market is projected to grow at a compound annual growth rate (CAGR) of over 11% between 2026 and 2034, reaching a value of USD 46.0 Billion. These services allow consumers to make purchases, particularly online, and pay for them in interest-free instalments. Last festive season, some retailers reported that up to 30% of their sales in categories like electronics and fashion were routed through BNPL. This form of credit is especially popular among younger, tech-savvy shoppers and is expanding rapidly into Tier-II and Tier-III cities. Furthermore, the integration of credit lines with the Unified Payments Interface (UPI) allows users to access pre-sanctioned loan amounts for everyday transactions, further blurring the line between spending and borrowing.
Spending Spreads Beyond Big-Ticket Items
Traditionally, festive credit was associated with major purchases like televisions, refrigerators, or smartphones. While electronics remain a key category, with offers of significant discounts on credit card EMIs, the trend is now diversifying. Consumers are increasingly using credit for fashion, beauty products, travel, and even groceries. Online retail forecasts for the 2026 festive season predict sharp growth in categories like grocery (48-50%), home and furniture (32-35%), and beauty and personal care (35-40%). Even travel portals are offering discounts of up to 15% on flights and hotels paid for with credit card EMIs, encouraging families to finance their holiday trips. This expansion across categories signifies a fundamental shift in consumer behaviour, where credit is used not just for aspirational purchases but for managing overall festive cash flow.
A Word of Caution from the Regulator
While this credit-fuelled consumption boosts economic activity, it has also caught the attention of the Reserve Bank of India (RBI). The central bank's recent Financial Stability Report noted that Indian household debt has been climbing, with a notable shift towards unsecured loans—like personal loans and credit card debt—which are not backed by assets like a house or gold. As of March 2026, non-housing retail loans accounted for 58.4% of total household borrowings. In response to rapid growth in this area, the RBI has previously tightened norms for lenders to curb overly aggressive practices and ensure financial stability. While asset quality for most retail loans remains strong, with low non-performing assets (NPAs), the central bank is monitoring the situation closely to prevent households from becoming over-leveraged.
