India's financial landscape is undergoing a notable transformation, with states like Uttar Pradesh, Madhya Pradesh, and Bihar emerging as key engines of the nation's credit growth. Data from TransUnion CIBIL reveals a substantial increase in financial inclusion, as the proportion of eligible Indians who have taken credit at least once more than doubled from 35% in March 2017 to 74% in March 2026.
Shifting Geographic Landscape for Credit Uptake
While Maharashtra and Tamil Nadu historically dominated India's credit market, their share of credit-active consumers has moderated. Maharashtra's share decreased from 12% to 10%, and Tamil Nadu's fell from 11% to 9% between March 2017 and March 2026.
Conversely, Uttar Pradesh saw its share surge from 8% to 11%, Madhya Pradesh increased from 4% to 6%, and Bihar rose from 3% to 5%. Bhavesh Jain, MD and CEO of TransUnion CIBIL, highlighted that this shift indicates consumers in these geographies are transitioning from informal to formal credit sectors. The data also shows that the share of credit-active consumers from semi-urban and rural markets expanded significantly, rising from 53% to 63% in the same period.
Consumer Durables Fuel New Borrowers
The primary drivers for new-to-credit customers have also evolved. Previously, two-wheelers and agriculture loans were the main entry points for first-time borrowers. By 2026, consumer durables, particularly smartphones and mid-range household goods, have become the leading category. These loans typically have an average ticket size of Rs 38,000. Jain explained that while the two-wheeler market continues to grow, the smartphone has become an essential item for the younger generation, driving this new trend in credit uptake.
Demographic Shifts and Low Delinquencies
Beyond geographic shifts, the credit market is becoming more diverse. The total number of credit-active consumers more than doubled from 11% to 28% between March 2017 and March 2026. A significant trend is the increased participation of women, whose share among active borrowers grew from 22% to 30%. Similarly, younger borrowers (under 35) now constitute 39% of the credit-active population, up from 33%.
Despite this rapid expansion, retail loan delinquencies are at a near decade low. Overall retail delinquency stands at 1.3%, with personal loan delinquencies under 1%. Officials attribute this to enhanced credit monitoring and regulatory policies, noting that borrowers who actively monitor their credit show better repayment rates.
Lender Strategies and Future Outlook
Financial institutions are increasingly prioritizing deeper engagement with existing customers over acquiring new-to-credit consumers. Lenders prefer borrowers who not only have an established credit history but also an existing relationship with them through previous loans or credit cards. TransUnion CIBIL sees immense opportunities for market scaling, emphasizing the need for deeper engagement with credit-active and experienced consumers while continuing to penetrate new markets.