India's non-banking finance sector has emerged as a central channel for first-time borrowers, with NBFCs now originating half of the country's new-to-credit customers, compared with 24% in June 2016, according to a TransUnion CIBIL-FIDC report released on Thursday. The finding, based on data from about 2,000 NBFCs, points to a structural change in how credit is reaching households and small businesses that have historically remained outside the formal banking net.
The report is significant not only because of the scale of the shift, but because it reflects the widening role of NBFCs in India's credit architecture. New-to-credit, or NTC, borrowers are typically individuals or businesses with no prior formal borrowing history. For lenders, this segment represents both an opportunity and a risk: it is a source of future growth, but also requires sharper underwriting, stronger data use and disciplined collections. The fact that NBFCs now account for half of this pool suggests that they have become the preferred entry point for millions of borrowers seeking their first loan, whether for mobility, consumption or microenterprise needs.
Credit Access Shift
The rise in NBFC participation comes at a time when India's credit market is becoming more granular and more digitally enabled. NBFCs have traditionally been more flexible than banks in serving borrowers with limited credit histories, thinner documentation or irregular income patterns. That flexibility has made them especially relevant in vehicle finance, two-wheeler loans, used-car financing and emerging mobility categories, including electric vehicles, where first-time buyers often need tailored repayment structures and faster approvals.
For the automotive and mobility sector, the implications are direct. Vehicle ownership in India is still expanding from a relatively low base in many segments, and access to credit remains one of the biggest determinants of demand. NBFCs have played a crucial role in financing entry-level vehicles, commercial fleets, and increasingly, electric two-wheelers and small EVs used for delivery and urban commuting. As the market shifts toward electrification, the ability of NBFCs to underwrite new borrowers could influence how quickly EV adoption broadens beyond early adopters.
The report also highlights the changing geography of financial inclusion. NTC borrowers are often concentrated in smaller towns, semi-urban markets and informal income segments where banking penetration alone has not been sufficient to unlock credit demand. NBFCs, with their distribution networks and sector-specific expertise, have been able to build relationships in these markets and extend credit where traditional lenders may have been slower to move. That has made them an important bridge between India's expanding consumer economy and its still-evolving formal credit system.
Why It Matters Now
The timing of the report matters because India's lending environment is under pressure to balance growth with asset quality. A larger share of first-time borrowers can support credit expansion, but it also raises the importance of robust risk assessment, especially if economic conditions soften or repayment behaviour weakens. For NBFCs, the challenge is to continue expanding access without compromising portfolio quality. For regulators and lenders, the broader question is whether the system can absorb this growth sustainably.
TransUnion CIBIL's data also suggests that the credit market is becoming more diversified in who originates loans and who receives them. That diversification can deepen financial inclusion, but it also means the health of the NBFC sector has wider implications for consumer finance, vehicle sales and the broader mobility ecosystem. In practical terms, the report signals that India's next wave of borrowers is increasingly being financed outside the banking system, and that NBFCs are now shaping the first formal credit experience for a large and growing share of the population.
For automakers, EV makers and mobility financiers, the trend is especially important. First-time borrowers are often the customer base that determines whether entry-level vehicles, affordable EVs and fleet-linked mobility products can scale. If NBFCs continue to dominate the NTC segment, their underwriting standards, funding costs and product design will help set the pace for demand across India's automotive and electric mobility markets.
The report, covering roughly 2,000 NBFCs, offers a clear message: India's credit expansion is no longer being driven by banks alone. NBFCs have become a decisive force in bringing new borrowers into the formal financial system, and their role is likely to remain central as the country's mobility and consumer finance markets continue to evolve.