India's Tier-2 cities are emerging as the strongest hubs for digital credit inclusion, significantly outperforming both Tier-1 metropolitan areas and Tier-3 cities. This insight comes from the Digital Credit & Inclusion Index (DCII) 2026 report, a collaborative effort by Pahlé India Foundation and Amazon Pay.
India's Digital Credit Landscape
The national DCII score for India stands at 55.85 out of 100, placing the country in the “Emerging and Served” category. The index, which serves as India's first composite benchmark on digital credit, is based on a comprehensive primary survey of over 5,000 respondents across 100 cities in 20 states. It evaluates various facets of digital credit, including access, adoption, trust, borrowing behavior, and its overall impact on financial outcomes.
While access emerged as the strongest pillar with a score of 61.24, followed by adoption at 57.17, the impact pillar lagged at 49.16. This suggests that while more people can access and adopt digital credit, its full potential in fostering financial resilience and savings outcomes has yet to be realized.
Tier-2 Cities Lead the Charge
Tier-2 cities recorded an impressive average DCII score of 58.64. This figure significantly overshadows Tier-1 cities, which scored 53.1, and Tier-3 cities, at 55.7. Cities like Coimbatore, Surat, Nagpur, Indore, Prayagraj, Ranchi, Ghaziabad, and Ludhiana are at the forefront of this trend, driving the increased adoption and inclusion.
Furthermore, the report highlights a more balanced participation in Tier-2 markets. The gender gap in digital credit inclusion is notably narrower in these cities, standing at just 2.8 points compared to a wider 9.1-point gap observed in Tier-1 cities. This marks a departure from India’s digital payments journey, where Tier-1 cities traditionally led, indicating that smaller urban centers are poised to drive the next wave of digital credit expansion.
Awareness vs. Trust and Usage Patterns
Awareness of digital credit instruments is high, with 94.4% of respondents familiar with at least one offering. However, this high awareness doesn't translate directly into trust. Confidence in digital borrowing is considerably weaker (52.5) compared to digital payments (69.7), revealing a 17-point trust gap. This disparity underscores the need for greater transparency and simplicity in digital lending processes to build consumer confidence.
Digital credit also plays a limited role as a financial safety net during stress. Nearly half (48.2%) of respondents reported turning to savings during their last cash shortfall, while only 6.9% utilized a digital loan app and 3.4% opted for Buy Now, Pay Later (BNPL) services.
Demographic Insights and Productive Use
Economic agency is a key driver of digital inclusion. While men generally score higher, salaried women achieved a DCII score of 62.0, surpassing salaried men at 60.2, effectively reversing the broader gender gap within this segment. The gap also narrows significantly among younger consumers, with a 2.9-point difference for those aged 18-29, compared to 4.6 points for respondents aged 60 and above.
Conversely, homemakers, gig workers, daily-wage earners, and students show lower digital credit inclusion scores, trailing salaried and business respondents by approximately 11 points.
Currently, digital credit is predominantly used for consumption, with 59% of respondents purchasing electronics and home appliances. Productive use, such as for business or long-term financial goals, remains lower at 43.2. However, frequent users demonstrate stronger productive usage, with 64% reporting such applications. This suggests that increased familiarity with digital borrowing could encourage its use for more strategic financial objectives.
The DCII report underscores the next critical challenge for India's digital finance ecosystem: moving beyond mere access and adoption to cultivate trust, promote responsible and productive borrowing, and ultimately translate digital credit into tangible improvements in financial resilience for all citizens.