₹30,000 Salary, ₹40 Lakh Loan: Gen Z Trapped in Debt, Rising Cases of Cheque Bounces

Rising Loan Defaults Among Youth: India is witnessing a surge in loan defaults, with the younger generation increasingly caught in a web of debt. Alongside rising loan delinquencies, cases of cheque bounces are also climbing sharply.

Young Borrowers Take on Massive Debt
According to reports, hundreds of young adults aged 25–35 are falling into debt traps every month. The so-called Zoomers, born between 1997 and 2012, are the first generation to accumulate such high levels of borrowing. Unlike previous generations, for whom taking loans was largely taboo, many Gen Z borrowers are taking loans up to 100 times their monthly salaries—earning ₹30,000–₹40,000 per month while borrowing ₹30–40 lakh. The main reason is the growing gap between income and expenditure, which borrowers try to bridge with loans, often spiraling out of control.

Why Debt Keeps Rising
For many, borrowing begins with small, unsecured loans to cover essential expenses, lifestyle upgrades, gadgets, travel, or career investments. Digital platforms make these loans easily accessible without collateral or complicated procedures. However, as EMIs outpace income, borrowers often take additional loans to repay existing ones, creating a cycle of debt.

Gen Z’s Credit Situation
A CIBIL report shows that Gen Z makes up 41% of new credit borrowers. Another report by CRIF High Mark and Unified Fintech Forum (UFF) states that, as of June 2025, over 65% of NBFC fintech loan borrowers are aged 26–35. While this generation is boosting consumption, it is lagging in repayments, particularly for smaller loans under ₹50,000. CRIF-UFF data indicates that roughly 26% of these loans are overdue by more than 90 days.

Cheque Bounce Cases Soar
Cheque bounce cases are also on the rise. Bollywood actor Rajpal Yadav recently faced jail time over a ₹9 crore cheque bounce case. Currently, over 43 lakh cheque bounce cases are pending across India. Despite the legal provision of up to two years’ imprisonment, fear of punishment remains low among defaulters.

Bank NPAs Keep Growing

• Credit card dues rose 28.4% to ₹6,742 crore.
• About 1,629 major borrowers defaulted on ₹1.62 lakh crore in loans.
• Bank NPAs increased by 3.7%, while the microloan sector saw NPAs rise to 4.8%.
• 44% of credit card holders are defaulting; credit card NPAs stand at 2.3%.

Maharashtra Leads in Cheque Bounces
Of over 33 lakh bounced cheques nationwide, just five states account for the majority. Maharashtra tops the list with 5.6 lakh pending cases, followed by Gujarat with 4.8 lakh. Pune alone recorded 780 cheque bounces totaling ₹30.15 crore. In response, the Supreme Court recently issued new 2025–26 guidelines emphasizing faster resolution of cheque bounce cases through WhatsApp notices and 20% interim payments.