India's non-banking finance companies have emerged as a central channel for bringing first-time borrowers into the formal credit system, with new-to-credit customers sourced by NBFCs rising to 50% in June 2026 from 24% in June 2016, according to a TransUnion CIBIL-FIDC report released on Wednesday.
The study, which draws on data from about 2,000 NBFCs, points to a structural shift in the country's credit landscape. As banks have tightened underwriting in some segments and digital lending has widened access, NBFCs have increasingly filled the gap for consumers and small businesses with limited or no prior credit history. The trend is especially significant for India's automotive and mobility markets, where vehicle finance often serves as the first formal borrowing relationship for households entering the credit system.
NBFCs Lead Credit Entry
The report suggests that NBFCs are no longer operating at the margins of retail finance; they are now a primary entry point for borrowers who would otherwise remain outside the formal lending network. New-to-credit, or NTC, customers are typically individuals with little or no recorded borrowing history, making them harder to assess through conventional credit models. NBFCs, with their wider branch footprints, faster turnaround times and more flexible product structures, have been able to serve this segment more effectively than many traditional lenders.
For the automotive sector, this matters because vehicle ownership in India is closely tied to credit availability. Two-wheeler and used-car financing, in particular, depend heavily on lenders willing to underwrite first-time borrowers in semi-urban and rural markets. The rise in NBFC participation indicates that credit access is expanding beyond metropolitan, salaried consumers to a broader base of aspirational buyers, including self-employed workers and informal sector households.
The report's findings also reflect the growing sophistication of NBFC underwriting. Over the past decade, lenders have increasingly used alternative data, digital verification and transaction histories to evaluate borrowers with thin credit files. That has allowed them to extend credit to segments that were previously considered too risky or too difficult to score. The result has been a widening of formal credit penetration, but also a greater responsibility on lenders to manage delinquency and avoid overextension.
Mobility Finance Expands
In mobility finance, the implications are substantial. Vehicle loans are often the first formal debt product for Indian households, and a successful repayment history can open the door to home loans, personal loans and business credit. By financing first-time borrowers, NBFCs are helping create future credit histories that can support broader consumption and asset ownership.
The report arrives at a time when India's mobility market is being reshaped by electrification, rising used-vehicle demand and the continued recovery of rural consumption. NBFCs have been active in financing entry-level vehicles, commercial fleets and increasingly electric two-wheelers, where borrower profiles may be newer to credit and dealer ecosystems are still evolving. Their role is especially important in markets where bank lending remains conservative or documentation requirements are harder to meet.
At the same time, the expansion of NTC lending carries risks. First-time borrowers can be more vulnerable to income shocks, and lenders serving this segment must balance growth with prudent risk controls. The report does not suggest a deterioration in credit quality, but it does highlight the need for disciplined underwriting as NBFCs deepen their reach into less formal parts of the economy.
Credit Access Broadens
The broader policy significance is clear: India's financial inclusion story is increasingly being written through non-bank lenders. As NBFCs account for a larger share of first-time borrowers, they are helping convert latent demand into formal credit demand, particularly in segments linked to mobility, small enterprise and household asset purchase.
For regulators and lenders alike, the challenge will be to sustain this expansion without compromising asset quality. The next phase of growth is likely to depend on better data sharing, stronger borrower assessment tools and continued collaboration between banks, NBFCs and credit bureaus. If managed well, the rise of NBFC-led NTC lending could deepen India's credit market while supporting vehicle ownership and mobility-led consumption across the country.