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Formal Retail Credit Access Doubles in India Over Past Decade, TransUnion CIBIL Report Shows

India has recorded a significant rise in formal retail credit penetration over the past decade, with access expanding across a wider credit-eligible population and broader geographic regions. According to a report by credit bureau TransUnion CIBIL, the proportion of consumers accessing formal credit at least once rose dramatically, driven largely by consumption-oriented financial products.

What Happened

Data from TransUnion CIBIL shows that the share of consumers who accessed formal credit at least once increased from 35% in March 2017 to 74% in March 2026. During this period, the credit-eligible population grew from 79 crore to 89 crore. Deepening participation in formal finance was also evident in the ratio of credit-active consumers, which expanded from 11% to 28%.

Consumption-led lending has become the primary entry path into the formal financial system. Products such as personal loans, credit cards, and consumer durable loans now represent the largest portion of borrower wallets, with first-time borrowers frequently opting for small-ticket unsecured loans to purchase electronics rather than traditional asset-backed financing.

Key Highlights

  • Doubling Access: Credit penetration grew from 35% in March 2017 to 74% in March 2026 across an expanded eligible population of 89 crore.
  • Consumption Focus: The share of active borrowers holding consumption products rose from 34% in 2017 to 51% in 2026, with borrower numbers in this segment quadrupling.
  • Regional Shifts: Credit growth moved toward northern and central states. Uttar Pradesh’s share of active borrowers rose to 11% from 8%, Madhya Pradesh grew to 6% from 4%, and Bihar reached 5% from 3%, while shares in Maharashtra and Tamil Nadu moderated.
  • Broader Demographics: Adoption expanded among women, individuals under 35 years old, and residents in rural and semi-urban regions.
  • Product Preferences: Mobile phones have replaced vehicles and two-wheelers as the preferred product choice for younger initial borrowers.

Why This Matters

The findings point to a structural transformation in consumer financial behavior. Bhavesh Jain, Managing Director and CEO of TransUnion CIBIL, stated that wallet composition shifts indicate credit is increasingly viewed as a tool for a lifestyle-driven approach, contrasting with the asset-based borrowing model of a decade ago. He highlighted that consumption loans have facilitated wider credit dispersion, noting that mobile phones have emerged as the choice product for younger borrowers over vehicles.

What to Watch Next

As credit adoption continues to widen across central and northern states alongside younger and rural demographics, financial institutions will monitor portfolio performance and borrowing patterns across small-ticket unsecured lending categories.

Frequently Asked Questions

How much did formal credit access grow between 2017 and 2026?

The proportion of consumers accessing credit at least once grew from 35% in March 2017 to 74% in March 2026, while credit-active consumers increased from 11% to 28%.

What is driving new credit adoption in India?

Consumption-led loans, including personal loans, credit cards, and consumer durable financing for items like electronics, serve as the main drivers for new credit entrants.

Which states saw an increase in their share of active credit borrowers?

Northern and central states gained share, with Uttar Pradesh rising to 11%, Madhya Pradesh to 6%, and Bihar to 5% of the total credit-active consumer pool.

Source: TransUnion CIBIL report, via The Times of India.