MUMBAI, July 30 — India’s formal retail credit penetration has more than doubled over the past decade, according to a report from TransUnion CIBIL. The share of consumers who accessed credit at least once rose from 35% in March 2017 to 74% in March 2026, while the credit-eligible population expanded from 79 crore (790 million) to 89 crore (890 million). The report notes a marked increase in active usage.
The proportion of credit-active consumers — those who actively used credit — rose from 11% to 28%, signalling deeper engagement with formal finance. Consumption-led lending drove the change, the report found.
Personal loans, credit cards, and consumer durable loans became the dominant entry points. The share of credit-active consumers holding such consumption products grew from 34% in 2017 to 51% in 2026, and the number of these borrowers increased fourfold. This category now accounts for the largest share of borrower wallets, reflecting a structural shift toward lifestyle-driven credit usage.
The expansion of formal credit in India reflects broader trends in financial inclusion, driven by policy initiatives such as the Pradhan Mantri Jan Dhan Yojana, which aimed to bring unbanked households into the banking system. The proliferation of digital payment platforms and the widespread adoption of smartphones have also lowered barriers to accessing credit, particularly for first-time borrowers in urban and semi-urban areas.
Regulatory reforms by the Reserve Bank of India, including the introduction of a unified payments interface and liberalized norms for non-banking financial companies, have further enabled lenders to reach a larger customer base. The shift toward consumption-led lending represents a significant change in India’s credit landscape, historically dominated by housing and agriculture loans. Personal loans, credit cards, and consumer durable loans now serve as entry points for millions of new borrowers, reflecting rising disposable incomes and changing spending habits.
This trend has implications for household debt levels and financial stability, as consumption credit typically carries higher interest rates and shorter tenures than secured loans. Analysts have noted that sustained credit growth must be accompanied by robust credit assessment and consumer protection measures to manage potential risks. The data from TransUnion CIBIL underscores the role of credit bureaus in deepening formal finance by enabling lenders to evaluate borrower risk more accurately.
Improved credit information sharing has helped reduce default rates and expand the pool of credit-eligible individuals. As India’s formal credit penetration approaches levels seen in more developed economies, policymakers continue to focus on bridging remaining gaps in rural and informal-sector access, where cash-based transactions remain prevalent.
The long-term significance of this doubling lies in its potential to support economic growth by channeling household savings into productive consumption and investment, while also posing challenges for inclusive and sustainable lending practices.
