How microloans are driving India's festive shopping

Copyright © HT Digital Streams Limited All rights reserved. The microloans powering India’s festive shopping—from smartwatches to protein powders Easy availability of microloans on digital platforms is boosting festive shopping this year, even for low-priced products. Summary Low-interest consumer loans are fueling India’s festive shopping boom as Gen Z and young shoppers splurge on everything from luxury gadgets to everyday goods. However, there are concerns that growing small-ticket debt could lead to an increase in bad loans. India’s festive season shopping spree this year is being driven not only by demand for luxury items such as smartwatches and jewellery, but also by an increase in microloans that are driving purchases of less expensive products such as protein powders and hair dryers. Fintech startups like Snapmint and Kiwi are seeing a rush of young shoppers using low-interest consumer loans for their festive season purchases. Snapmint, a Mumbai-based non-banking financial company, facilitates sales of various brands on its platform via interest-free loans that can be repaid in equal monthly installments (EMIs). In September, Snapmint saw its total volume of interest-free EMI transactions rise to over 1 million from around 350,000 a year ago. “The 20–30 age group represents nine out of 10 of our customers for whom no-cost EMI has become the best financing option,” said co-founder Abhineet Sawa. Interest-free EMIs are the third most popular payment method behind UPI and cash-on-delivery – a “remarkable surge that we have never seen before”, he added. Last week, Kiwi launched a so-called ‘interest-back EMI on UPI’ feature that allows consumers to split big-ticket purchases into easy installments and earn back the interest paid. Shoppers on the platform are spending at least 50% more on e-commerce purchases with Credit on UPI this year than last year, co-founder Anup Agarwal said. Credit on UPI, which was rolled out by the Reserve Bank of India two years ago, enables users to access pre-approved lines of credit from banks directly through UPI, or the Unified Payments Interface that enables real-time bank transfers. “Transaction volumes on credit on UPI have grown sharply, both in spend per user and average ticket size of festive purchases,” Agarwal said. “This growth is not limited to metros. We are seeing significant traction from tier-2 and tier-3 cities, where users are increasingly adopting digital credit for both everyday and festive spending.” Other fintech companies, including Fibe (formerly EarlySalary) and PayU’s LazyPay, also offer low-cost consumer loans via partners such as food delivery platform Zomato, ticket booking app BookMyShow, and ride-hailing startup Rapido. E-commerce giants Flipkart and Amazon are among pioneers in offering low-cost consumer loans through credit cards and lending platforms such as Bajaj Finserv. During its annual two-week Great Indian Festival sale that ended last week, Amazon India saw shoppers use loans on its platform for one in six purchases of mobile phones, major appliances and other electronics. Of these, 80% of the purchases involved interest-free loans, the company said in a statement on Thursday. The overall volume of no-cost loan transactions grew 10% this year, while Amazon Pay Later saw a 15% increase in usage, it added. Key Takeaways Low-interest consumer loans and digital credit platforms like Snapmint and Kiwi are driving India’s 2025 festive season purchases, from luxury gadgets to everyday items like protein powders and hair dryers. Young buyers, especially those aged 20–30, are the primary users of interest-free EMIs and Credit on UPI, with adoption spreading beyond metros to tier-2 and tier-3 cities. Easy access to credit and minimal scrutiny can encourage overspending, with a potential increase in delayed repayments and defaults after the festive season. Reckless spending, minimal scrutiny Brands are increasingly striking partnerships with lending platforms to offer instant loans to consumers, said Chirag Taneja, chief executive of GoKwik, an e-commerce aggregator for companies including consumer goods giant ITC Ltd, eyewear retailer Lenskart and beauty products retailer Lakme. Personal care and apparel companies are rapidly partnering with NBFCs as demand for credit is rising, even for frequently purchased products, he added. On Snapmint, the fashion category accounted for about 30% of all transactions in the previous 12 months, when it disbursed about ₹3,000 crore in loans. Electronics accounted for 22% of purchases, and travel bookings, 12%. For Kiwi, non-discretionary categories such as e-commerce and travel account for nearly 40% of total spend. Nearly 41% of the products sold on Snapmint this year were priced below ₹500—up from 30% last year—while 18% were in the ₹1,000-2,000 category. The growing reliance on credit for low-cost purchases is a concern, however, as it can encourage reckless spending and because of the minimal scrutiny involved, said Anand Agrawal, chief technology and product officer at debt collection platform Credgenics. “The rise in buy-now-pay-later, short-term loans and digital credit channels have contributed to a higher volume of small-ticket loans this year,” he said. “In the months shortly after the festive spending is over, the incidence of delayed repayments and overdue accounts is expected to see a surge compared to the other steady months.” The Gen Z Borrowers According to credit bureau CRIF High Mark, credit card payments overdue by 91-360 days rose more than 40% to ₹34,000 crore in the year to March 31, while credit card spending rose 15% to ₹21 trillion in that period. Consumer loans on EMIs can be availed with credit cards, debit cards and UPI. Agrawal said the combination of aggressive unsecured lending and easier availability of credit through digital channels is expected to make loan repayments more challenging, especially during festive months when the volume of loans is higher. “As the festive season kicks off, we’ve seen ‘average days overdue’ increase by 3-4 days across the delinquency stages,” says Ananth Shroff, co-founder and CEO of debt collection platform DPDZero. ‘Average days overdue’ refers to the average number of days a customer is late repaying a loan after the original due date. While consumer loans have become easy to access via digital apps in recent years, lenders are not doing enough risk screening or checking the credit scores of borrowers, said Paritosh Gunjan, co-founder at wealth management firm Liquide. “It puts loans in the hands of individuals who don’t necessarily understand how they work and how credit scores can be affected.” In the December quarter of 2024, users born after 1995 accounted for 41% of new-to-credit customers, according to data from TransUnion Cibil, a Reserve Bank of India-licensed credit bureau. “There is a fundamental shift in the way this generation views money versus the previous generation,” Gunjan said. “The ‘save before you spend’ ideology no longer exists and access to credit makes it so much easier to buy everything off the shelf.” Get all the industry news, banking news and updates on Live Mint. Download the Mint News app to get daily market updates. more topics #festiveseason #Indianstartups #CreditTrends Read next story