Growth in new credit-active consumers in India has moderated to a 9% annual rate, down from 15% previously. Lenders are now focusing on deepening relationships with existing borrowers rather than rapid expansion. While new borrower additions have cooled, credit penetration has reached 28% of the eligible population, with women and younger demographics emerging as key drivers for long-term growth.
India’s credit market is transitioning from a phase of rapid expansion to one focused on sustainability and maturity. According to the latest data from TransUnion CIBIL, the growth of new credit-active consumers has moderated to a 9% compound annual growth rate (CAGR) for the period ending March 2026. This is a significant cooling compared to the 15% CAGR recorded between March 2017 and March 2020. This shift suggests that banks and non-banking financial companies (NBFCs) are prioritizing the management of existing portfolios over aggressive new customer acquisition.
Credit Penetration and Borrower Profile
While the pace of adding new borrowers has slowed, overall financial inclusion continues to rise. Nearly 28% of the eligible population in India is now actively using formal credit, compared to just 11% in March 2017. Furthermore, the number of adults who have accessed formal credit at least once has reached 74%. Notably, the proportion of new-to-credit borrowers has dropped to 13% from 32% in 2017, reinforcing the view that lenders are concentrating on deepening relationships with customers who already have a credit history. This maturation is also evident in the length of credit history; consumers with more than five years of retail credit experience now account for 54% of the active base, up from 38% nine years ago.
Shifting Demographics and Product Trends
Future credit demand is increasingly coming from diverse segments, including women, individuals under 35, and borrowers in semi-urban and rural regions. Women now make up 30% of the credit-active population, while borrowers under 35 represent 39% of the base. Geographically, states like Uttar Pradesh, Bihar, and Madhya Pradesh are witnessing higher credit activity, moving the focus beyond the traditional hubs in southern India. In terms of products, personal loans, credit cards, and consumer durable financing continue to dominate, accounting for 51% of credit activity. Business credit has also seen substantial growth, increasing tenfold over the past decade, alongside a resurgence in gold loan demand.
Maintaining Credit Quality
For investors monitoring the financial sector, the key takeaway is the evolution in underwriting standards. With the share of leveraged borrower originations stabilizing after peaking in FY17, lenders appear to be maintaining tighter control over credit quality. As the market matures, the ability of financial institutions to manage risk while serving a more diverse and inclusive customer base will be essential. The next phase of credit growth will likely be measured by the sustainability of these portfolios and the depth of penetration in under-served regions rather than just the raw number of new borrowers added to the system.