First-time borrowers deepen credit reach: Credit uptake among eligible Indians more than doubled to 74% in March from 35% in 2017
Institutional credit penetration is expanding significantly in India, with credit uptake among eligible first-time borrowers more than doubling to 74% in March 2026 from 35% in 2017. Consumer durable loans are a primary driver in bringing new-to-credit customers into formal institutional borrowing channels. Gold loans and microfinance also play crucial roles in this growing accessibility of credit. This trend indicates increasing financial inclusion and the expansion of formal credit beyond major urban centers into smaller locations.
What this means
The rapid increase in first-time borrowers signifies a deepening of financial inclusion and a growing addressable market for banks and NBFCs. This segment, while offering growth opportunities, requires robust credit assessment models and tailored product offerings to manage potential risks, given their limited credit history. Banks need to balance growth with prudent underwriting.
Most affected: Retail credit, Microfinance institutions, NBFCs
Key takeaway: Develop advanced credit scoring models and diversified product strategies to effectively tap into the expanding base of first-time borrowers while managing risk.
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