According to the RBI’s Financial Stability Report, India’s household debt climbed to 45.5 per cent of the GDP by September 2025 and touched 47.8 per cent by December. A large part of this comes from spending, not asset building. Non-housing retail loans, personal loans and credit cards together now make up 58.4 per cent of household debt, up from around 50 per cent in 2019-20. Debt per head has also increased, from Rs3.9 lakh in March 2023 to Rs4.8 lakh in March 2025. And, this surge has led to a rise in debt management services.
India has moved from a ‘save first, spend later’ culture to one where people increasingly spend tomorrow’s income today through loans. Consumerism, social media and fast fashion have accelerated this trend.
Bank lending norms are steadily loosening and public sector banks are struggling to attract deposits. As a result, lending portfolios have shifted towards private banks and NBFCs. Also, there is the rise of modern lending methods, including digital platforms like peer-to-peer lending and even repayment options using cryptocurrency. All of this creates arbitrage opportunities that debt management services are capturing. Wealth managers, for instance, seek to maintain strong relationships with high-net-worth individuals. For them, it is advantageous to manage not only the asset side of a client’s portfolio, but also the liability side.
Experts say debt management is fundamentally about changing financial behaviour, not just restructuring loans. “Many young professionals finance holidays, gadgets or lifestyle expenses assuming future income will comfortably cover repayments, only to find themselves paying 20 per cent or higher interest when circumstances change,” said Aswini Bajaj, CEO of Leveraged Growth. “Effective debt management analyses cash flows, repayment capacity, credit profile, spending behaviour and future obligations before recommending repayment prioritisation, consolidation or restructuring. The objective is not merely to reduce EMIs but to make debt sustainable.”
He added that debt management should be seen as a preventive financial health service rather than a recovery mechanism. “Increasingly, services also include financial coaching that helps people distinguish between productive debt, such as housing or education, and consumption-led debt,” said Bajaj.
The core offerings under debt management services include debt consolidation loans combining unsecured loans and card dues into one plan. “We are offering this as a dedicated product for borrowers managing multiple EMIs,” said Sarika Grover, cofounder of LoansJagat. “Then there are offerings such as settlement negotiation, which involves working with banks and NBFCs to reduce dues or waive penal charges for genuinely stressed borrowers. Additionally, there is credit counselling rooted in RBI’s Financial Literacy and Credit Counselling Centres framework. Some platforms also help borrowers renegotiate tenure or pause repayments during genuine income disruptions.”
The services also include overseeing digital lending apps, buy‑now‑pay‑later schemes and aggressive credit card acquisitions. “They help reduce risks, harassment and the social collateral costs faced by individuals,” said Prof Ram Kumar Kakani, vice chancellor, RV University, Bengaluru. “For example, they provide support through cash flow restructuring, negotiation with lenders and execution of one‑time settlements.”
Research in behavioural finance shows that financial distress is often caused less by inadequate income and more by impulsive consumption, poor budgeting, and over-dependence on expensive unsecured credit. This is why debt management services should evolve into what might be called household risk management. Evidence from countries such as the UK, Canada and Australia indicates that professionally managed debt-counselling programmes improve repayment behaviour and reduce personal insolvencies. India is still at an early stage, but encouraging trends suggest that borrowers who seek professional assistance before financial distress becomes severe are far more likely to regain stability.
“Technology is increasingly reshaping these services,” said Prof A.V. Arunkumar, director, IFIM Institutions. “AI and data analytics enable debt management firms to analyse transaction patterns, monitor spending behaviour, predict repayment stress and recommend personalised repayment strategies. AI-driven platforms are likely to function as personal financial risk managers. Rather than waiting for defaults to occur, they will identify early warning signs of financial stress and recommend corrective action well in advance.”
India’s expanding middle class, increasing urbanisation, digital economy and consumption-driven growth will continue to support rapid expansion in retail credit. As household borrowing increases, professional debt advisory will become an essential component of financial planning.
“Future platforms might even introduce stress tests for households, similar to those conducted by banks as per Basel III norms (requirements that apply to internationally active banks),” said Arunkumar. “Borrowers could assess how job loss, medical emergencies, inflation or interest rate increases might affect their repayment capacity. Then there are emerging concepts including scores that evaluate not only creditworthiness but also savings, investments, insurance coverage, liquidity, debt levels and financial behaviour.”
Experts say, in future, employers could include debt counselling and financial wellness programmes as part of employee wellbeing initiatives, recognising that financial stress adversely affects productivity and mental health.
