India's non-banking financial companies have emerged as a central channel for bringing first-time borrowers into the formal credit system, with their share of new-to-credit customers rising to 50% in June 2026 from 24% in June 2016, according to a TransUnion CIBIL-FIDC report released on the basis of data from about 2,000 NBFCs.
The trend marks a significant shift in the structure of retail and small-ticket lending in India. New-to-credit, or NTC, borrowers are individuals or businesses accessing formal credit for the first time, often with limited or no prior borrowing history. For lenders, this segment represents both an opportunity and a risk: it expands financial inclusion and broadens the credit base, but it also requires stronger underwriting, better data use and disciplined collections to manage default risk.
NBFCs Gain Ground
The report suggests that NBFCs have steadily deepened their role in credit intermediation over the past decade, particularly in markets and borrower segments where banks may have been slower to lend. Their rise reflects a combination of factors, including wider distribution networks, more flexible product design, faster loan processing and a greater willingness to serve customers with thin or no credit files.
This expansion has been especially important in India's smaller cities, semi-urban centres and informal-income segments, where access to first-time credit is often constrained by documentation gaps, irregular cash flows or limited banking relationships. NBFCs, by contrast, have often built business models around alternative data, local sourcing and specialised lending categories such as two-wheelers, consumer durables, microenterprise loans and small business finance.
The increase from 24% to 50% over a ten-year period indicates that NBFCs are no longer merely complementary lenders in the financial system. They are now a primary entry point into formal credit for a large share of borrowers. That shift has implications for household consumption, small business formation and the broader transmission of credit into the real economy.
Credit Inclusion Deepens
The rise in NTC borrowers also points to the continuing expansion of financial inclusion in India, though inclusion in itself does not guarantee durable credit health. A first-time borrower who enters the formal system through a well-structured NBFC product may later graduate to larger loans from banks or diversified lenders. But if the initial loan is poorly matched to repayment capacity, the borrower can quickly become stressed and exit the system with a damaged credit profile.
That is why the quality of underwriting matters as much as the quantity of new borrowers. The TransUnion CIBIL-FIDC findings come at a time when lenders across the sector are paying closer attention to risk-adjusted growth, especially after periods of rapid retail credit expansion. For NBFCs, the challenge is to continue serving first-time borrowers while maintaining asset quality and avoiding overextension in unsecured or lightly secured segments.
The data also highlights the growing importance of credit bureaus and analytics in India's lending ecosystem. As more borrowers enter the formal system for the first time, bureau coverage and repayment histories become essential tools for pricing risk, detecting early stress and enabling borrowers to build a usable credit record. In that sense, the rise of NTC lending is not only a story about access, but also about the infrastructure required to make access sustainable.
Policy And Market Implications
For policymakers, the report reinforces the role of NBFCs in advancing the government's financial inclusion agenda. The sector has long been viewed as a bridge between formal finance and underserved borrowers, and the latest figures suggest that bridge has widened materially. That may support consumption and entrepreneurship, but it also places a premium on supervision, governance and responsible lending standards.
For banks, the findings are a reminder that the competition for first-time borrowers is intensifying. While banks retain scale, lower funding costs and broader balance sheets, NBFCs have demonstrated an ability to reach customers that are harder to serve through conventional branch-led models. The result is a more diversified credit ecosystem, but also one in which borrower acquisition is increasingly shaped by technology, distribution and data-driven underwriting.
The report's broad message is clear: India's credit market is still expanding, but the centre of gravity for first-time borrowers has shifted decisively toward NBFCs. That shift may help deepen formal finance across the country, yet it will also test the sector's ability to balance inclusion with prudence as more households and small businesses take their first step into debt.