India's non-banking finance companies have emerged as the principal entry point into formal credit for millions of first-time borrowers, 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 Tuesday.
The report, which draws on data from about 2,000 NBFCs, highlights a structural shift in India's retail lending market. NBFCs, long known for their reach beyond the traditional banking system, are increasingly serving customers with limited or no prior credit history. That trend has significant implications for automotive finance, two-wheeler lending, and the broader mobility ecosystem, where access to credit often determines whether a consumer can purchase a vehicle at all.
Credit Access Expands
The rise in new-to-credit, or NTC, borrowers reflects both demand and distribution. As India's economy formalises and consumer aspirations deepen, lenders with flexible underwriting models and wider geographic reach have been able to tap borrowers who may not yet qualify for mainstream bank loans. NBFCs have filled that gap by financing first-time borrowers in smaller cities, semi-urban markets, and rural regions where vehicle ownership is closely tied to livelihood and mobility.
In the automotive sector, this shift is especially important. Vehicle finance is often the first formal credit product for many households, and NBFCs have historically played a central role in funding two-wheelers, entry-level passenger vehicles, commercial vehicles, and increasingly electric mobility assets. The report suggests that NBFCs are not merely participating in this segment; they are helping define who enters the credit system in the first place.
That role has grown more pronounced over the past decade as banks have become more selective in some retail categories, while NBFCs have used local sourcing networks, dealer relationships, and faster turnaround times to expand lending. For borrowers with thin credit files, these lenders often provide the first recorded repayment history, which can later open access to larger and cheaper forms of credit.
Mobility Finance Shifts
The report's relevance extends beyond lending statistics. In the mobility market, credit availability is a direct driver of vehicle sales, fleet expansion, and adoption of newer technologies, including electric vehicles. For many consumers and small operators, the monthly instalment is the deciding factor in whether a vehicle purchase is feasible. NBFCs, by underwriting borrowers with limited credit histories, help convert latent demand into actual sales.
This is particularly significant in the context of India's EV transition. While policy support and falling operating costs are improving the case for electric mobility, financing remains a major hurdle for many buyers. NBFCs are increasingly expected to bridge that gap by tailoring products for EV two-wheelers, three-wheelers, and commercial fleets, where the economics depend heavily on affordable and accessible credit.
At the same time, the expansion of NTC lending carries risk. First-time borrowers lack repayment histories, making them harder to assess than established customers. That means NBFCs must rely on alternative data, field-level underwriting, and portfolio monitoring to avoid future stress. The challenge is to widen access without compromising asset quality, especially in segments exposed to income volatility or residual value uncertainty.
Inclusion Meets Discipline
The TransUnion CIBIL-FIDC findings point to a broader policy and market question: how to sustain financial inclusion while maintaining prudent lending standards. NBFCs have become indispensable to India's credit architecture, but their growing exposure to first-time borrowers also raises the stakes for risk management, collections, and customer education.
For regulators and lenders alike, the data suggests that the next phase of credit growth will depend not just on expanding loan books, but on improving the durability of those loans. If managed well, the NBFC-led expansion of new-to-credit lending could deepen formal financial participation, support vehicle ownership, and accelerate mobility adoption across income segments. If managed poorly, it could create pockets of stress in a market that is increasingly central to India's consumer economy.
For now, the report offers a clear signal: NBFCs are no longer peripheral players in India's retail credit market. They are the primary bridge between first-time borrowers and the formal financial system, with the automotive and mobility sectors among the biggest beneficiaries of that shift.