> ## Content Index > Fetch the complete content index at: https://research.finbox.in/llms.txt > Use this file to discover other available public pages before exploring further. # What Diwali left on India’s credit report - URL: https://research.finbox.in/newsletter/the-pattern/what-diwali-left-on-indias-credit-report/ - Published: 2026-11-13T12:33:13.000Z - Updated: 2026-11-13T12:33:13.000Z - Description: The festival of lights brought with it a fair amount of shadows. - Author: Mayank Jain - Tags: #ThePattern, Diwali, credit report, Digital Lending, india, mayank jain Hello everyone, Welcome to the 227th edition of The Pattern, where we connect the dots across finance, technology and the economy. I hope you all had a good Diwali, and that the days since have been kind to you, with more leftover kaju katli than pending emails. Somewhere between the third box of sweets and the fifth forwarded greeting, I ended up looking at payment data, which I'm told is not a normal festive activity. On the eve of Diwali, UPI cleared[ 975.8 million transactions in a single day](https://www.business-standard.com/finance/news/upi-volume-jumps-32-on-diwali-driven-by-last-minute-festival-buying-126111000636%5F1.html?ref=research.finbox.in), worth over ₹1.36 lakh crore. I was impressed for about a minute. Then I read the reports that followed, and I found myself far less interested in how much India spent than in how many lenders it's now going to owe. **Smaller baskets, more EMIs** Datum Intelligence’s festive tracker sums up the season as one that reached further while each order got smaller. Here’s what jumped out when I went through it: - The[ average card payment at online retailers fell 13%](https://www.business-standard.com/economy/news/india-s-festive-online-sales-rise-17-but-shoppers-spend-less-per-order-126111200967%5F1.html?ref=research.finbox.in), even though more people were shopping. - Around[ 60% of Flipkart's Big Billion Days buyers came from tier-II and smaller towns](https://www.business-standard.com/economy/news/india-s-festive-online-sales-rise-17-but-shoppers-spend-less-per-order-126111200967%5F1.html?ref=research.finbox.in). - In the first 12 hours of Amazon's sale,[ one in two shoppers paid with an EMI](https://www.business-standard.com/economy/news/india-s-festive-online-sales-rise-17-but-shoppers-spend-less-per-order-126111200967%5F1.html?ref=research.finbox.in). Price cuts were thin this year, so the real discount, more often than not, came as a bank offer or a no-cost instalment plan. I think that’s mostly a good thing. If a family in Bareilly can finally buy that washing machine because it’s split into six easy instalments, that’s financial inclusion doing exactly what it’s supposed to. The thing is, one small EMI hardly feels like a loan, so it’s easy to barely notice it. It’s when two or three more get added on from different lenders, all in the same few weeks, that it starts to add up. Little drops of water make the mighty ocean, as the saying goes, and come January, all those drops arrive together. **Gold, out of the locker** EMIs weren't the only way India borrowed this Diwali, though. Gold and silver actually[ turned cheaper on Dhanteras](https://www.business-standard.com/markets/commodities/gold-silver-turn-cheaper-on-dhanteras-amid-profit-booking-firm-dollar-126110600509%5F1.html?ref=research.finbox.in) this year, on profit booking and a firm dollar, which didn't seem to slow anyone down at the jeweller's. To me, though, the more interesting story was about the gold people already had at home, and how much of it is now being pledged for a loan. TransUnion CIBIL put out a new gold loan report a few days before the festival, and it says the[ gold loan book has trebled in three years to ₹22.5 lakh crore](https://www.etvbharat.com/en/business/gold-loan-stress-doubles-in-5-months-in-august-report-enn26110504165?ref=research.finbox.in). Most of that is healthy. People are borrowing against something they own, at far better rates than the local moneylender would charge, and delinquency across the book is still low. What I didn't know was how much of it comes from the same people borrowing again and again. Among borrowers with a good credit profile,[ more than one in two took another gold loan within 12 months](https://investmentguruindia.com/newsdetail/one-in-two-gold-borrowers-with-good-credit-profile-originated-another-gold-loan-within-12-months769201?ref=research.finbox.in), a higher repeat rate than any other liquidity product CIBIL looked at. And customers with four or more gold loans, who now make up over a quarter of the book, are slipping at[ roughly 1.5 times the overall rate](https://lapaasvoice.com/indias-gold-loan-book-nearly-triples-to-%E2%82%B922-5-trillion-as-delinquencies-rise-in-2026/?ref=research.finbox.in). The same release had another number I read twice. Among borrowers with a CIBIL score of 800 or below,[ close to three in ten who took a gold loan of up to ₹2.5 lakh already had another loan 30 or more days overdue](https://investmentguruindia.com/newsdetail/one-in-two-gold-borrowers-with-good-credit-profile-originated-another-gold-loan-within-12-months769201?ref=research.finbox.in) in the month before they borrowed. For some of them, the gold loan may well be how they're keeping other repayments afloat. But plenty of them didn't stay behind for long. Of those borrowers who were already behind,[ about 42% were current on all their loans 12 months later](https://investmentguruindia.com/newsdetail/one-in-two-gold-borrowers-with-good-credit-profile-originated-another-gold-loan-within-12-months769201?ref=research.finbox.in), higher than for any of the other short-term credit products in the study. So the same gold loan can be a red flag for one borrower and a way out for another, and from the outside you can't really tell which is which. I don't want to make this sound worse than it is. But it does bring to mind the old saying that all that glitters is not gold. With gold loans, I'd flip it around a bit. Even a loan backed by real gold isn't automatically safe, because the gold in the packet tells you very little about the person who pledged it. Bhavesh Jain, who heads TransUnion CIBIL,[ made a similar point](https://investmentguruindia.com/newsdetail/one-in-two-gold-borrowers-with-good-credit-profile-originated-another-gold-loan-within-12-months769201?ref=research.finbox.in) when he asked lenders to look at the borrower's full credit profile alongside the collateral. **More lenders, same door** Meanwhile, there are a lot more lenders going after these borrowers than there were even a couple of years ago. RBI data out last week showed[ NBFC credit growing 15.4% in September](https://www.tribuneindia.com/news/agriculture-credit/nbfc-credit-growth-accelerates-to-15-4-in-september-retail-lending-leads-expansion-rbi?ref=research.finbox.in), up from 13.3% a year earlier, with retail lending doing most of the work. Within that, retail loans grew 21.9%, and loans against gold were among the segments picking up pace. Gold lending is getting more crowded as well. According to ICRA, the four largest NBFCs' share of the NBFC gold loan book has[ slipped to about 70% from roughly 90% in 2022](https://www.deccanchronicle.com/amp/nation/gold-loan-market-set-to-hit-rs-30-lakh-crore-by-fy-28-icra-1975011?ref=research.finbox.in), which tells you how many newer names have walked in. Here's a made-up but very ordinary example. Sunita runs a small tailoring shop in Nashik. During the sale, she buys a fridge on a six-month no-cost EMI through one lender. A week later, a phone for her son goes on EMI with another. Just before Dhanteras, she pledges a gold chain with a third to buy fabric for the wedding season. And she's still repaying the microfinance loan she took last year. And honestly, you can't blame any of these lenders. Each one saw a customer with a decent record asking for a small, sensible amount. But by January, Sunita owes four lenders, and not one of them can see the whole picture. Each sees only its own loan, and the bureau catches up weeks later. That's what I mean by the crowded borrower. Every lender on her list would tell you she looks fine, and none of them is looking at all four loans together. **Microfinance has seen this film** If this sounds familiar, it's because microfinance lived through it. Not so long ago lenders crowded into the same districts, borrowers ended up with loans from too many places, and repayments slipped everywhere at once. CRIF's latest MicroLend data shows how far the sector has come back. Loans that are one to six months overdue, what the industry calls PAR 31 to 180,[ fell to 1.6% of the portfolio in September, from 4.6% a year earlier](https://www.tribuneindia.com/news/crif-report/nbfc-mfis-lead-in-indias-microfinance-sector-as-portfolio-share-touches-44-7-report?ref=research.finbox.in). The most useful line in the report, though, sorts borrowers by how many lenders they have. Those with two or fewer were delinquent at about 1.9%, while those with more than three were at[ 6.6%](https://www.tribuneindia.com/news/asset-quality/average-microfinance-loan-size-rises-17-5-to-rs-63000-as-lenders-focus-on-bigger-loans-report?ref=research.finbox.in). That's more than three times the stress, in the same product and broadly the same states. Does that surprise you? I'll admit it surprised me less than it probably should have. CRIF[ puts the recovery down](https://www.tribuneindia.com/news/crif-report/nbfc-mfis-lead-in-indias-microfinance-sector-as-portfolio-share-touches-44-7-report?ref=research.finbox.in) largely to guardrails on lender count and borrowers concentrating with fewer lenders. The sector got healthier once it started counting how many lenders each borrower already had. **Before the January EMIs land** Festive EMIs, gold loans and microfinance are very different businesses. Yet in all three, the early warning sign turns out to be how many lenders a borrower is already carrying. I'd go as far as to say lender count is the most underrated risk variable in Indian retail credit right now. A credit score looks backwards, and collateral only matters once something has gone wrong. What lenders often miss is how crowded a borrower has become since the last bureau pull. For the festive cohort, the real test comes in January and February, when its EMIs start landing alongside the year-end card bills. A few things seem worth watching closely until then: - Active trade lines and recent enquiries, read alongside the score rather than after it. - Fresher bank statement and cash flow data, because a bureau report pulled in September knows nothing about what the borrower bought on EMI in October. - How borrowers handle their first two or three instalments, which usually shows strain well before it reaches collections. The festive season brought a lot of new customers into formal credit, and that's worth celebrating. Microfinance has already shown what keeps them there, which is knowing more about each borrower, starting with how many other lenders they owe. That lesson travels well. The trick now is to spot the borrowers who've taken on a bit too much before January does. If you enjoyed reading this edition, do share it with folks in your circle who you think would like reading it too. 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Until next week, Mayank *Views are personal and do not reflect those of FinBox or its promoters.* **Further reading** - [The making of a digital-first NBFC](https://research.finbox.in/case-studies/digital-first-credit-transformation-for-indian-nbfc-a-finbox-case-study/) - [Account Aggregator data analysis for lending, explained and compared](https://research.finbox.in/blog/account-aggregator-data-analysis-for-lending-provider-comparison/) - [Credit underwriting software for NBFCs, including thin-file and new-to-credit approaches](https://research.finbox.in/blog/best-credit-underwriting-software-nbfcs-india-compared/) - [Gold loan delinquencies may rise under new RBI repayment norms: ICRA](https://www.business-standard.com/economy/news/gold-loan-delinquencies-may-rise-under-new-rbi-repayment-norms-icra-126072901323%5F1.html?ref=research.finbox.in) - [RBI may stop PE firms from controlling multiple NBFCs](https://www.freepressjournal.in/business/rbi-plans-new-rules-to-restrict-private-equity-control-in-multiple-nbfcs-may-ease-scrutiny-on-stakes-up-to-15?ref=research.finbox.in) - [Microfinance borrowers take bigger loans as ticket size rises 17.5%: CRIF](https://www.business-standard.com/amp/finance/news/microfinance-borrowers-take-bigger-loans-as-ticket-size-rises-17-5-crif-126110501284%5F1.html?ref=research.finbox.in) - [UPI transactions rise 28% over the Diwali period](https://www.ceovine.com/upi-transactions-diwali-2026-record-growth?ref=research.finbox.in)