India's credit participation among eligible citizens has reached unprecedented levels, with 74% of the 890 million eligible population now having accessed credit at some point in their lifespan, according to TransUnion Cibil data. This represents a dramatic increase from 35% in March 2017, indicating a more than doubling of credit uptake over the past six years. The remaining 13% of eligible Indians are classified as first-time borrowers, marking a significant expansion in financial inclusion across the country. New-to-credit customers are those who don't have prior borrowing history or footprint in the credit information bureau.
Consumer durable loans have emerged as the primary gateway for new-to-credit customers, accounting for 46% of originations to first-time borrowers by volume in the first quarter of the current fiscal year, as reported by CRIF High Mark. Gold loans follow as the second-largest entry point with 18.3% share, while personal loans contribute 18% and two-wheeler loans account for 11% of total originations to new borrowers. This trend reflects the growing accessibility of consumer credit through digital lending platforms, point-of-sale financing, and retailer partnerships, with India witnessing a rapid rise in access to consumer durable loans backed by these expansion initiatives.
The microfinance sector is experiencing significant growth in new-to-credit customer acquisition, with CreditAccess Grameen, the country's largest NBFC-MFI, adding approximately 980,000 borrowers in the latest period. According to Ganesh Narayanan, managing director of CreditAccess Grameen, 38% of these new borrowers are first-time customers without prior credit history. Several other NBFC-MFIs, which had either stopped or slowed lending to the new-to-credit segment at the peak of the sectoral asset quality stress, are now raising their stakes with first-time borrowers, according to chief executives. This expansion reflects the broader trend of NBFC-MFIs resuming lending to new-to-credit segments after scaling back during asset quality stress periods.
Credit penetration beyond major cities has shown substantial improvement, with two-wheeler loans recording the highest penetration at 53% beyond the top 100 cities, as reported by CRIF High Mark. Consumer durable loan penetration has also increased significantly to 43.5% in Q1 FY27 from 40.8% a year prior. This expansion of institutional credit accessibility demonstrates the deepening reach of financial services across smaller locations, indicating broader financial inclusion across India's diverse geographic landscape and raising access to institutional credit for all segments of the population.
India's retail credit portfolio has demonstrated robust growth, expanding to ₹179 lakh crore in the June quarter with a 19.2% year-on-year growth, according to TransUnion Cibil data. Gold loans recorded the highest increase at 62.2%, followed by consumer durable loans at 36.6%, sole-proprietor loans at 24.4%, and auto loans at 18%. This performance across multiple credit segments reflects the overall strengthening of India's retail credit market and the successful expansion of financial services to previously underserved segments, with the growth driven by the rapid rise in access to consumer durable loans and the expansion of digital lending platforms.
