Non-banking finance companies now account for half of India’s new-to-credit borrowers, signalling a transformative shift driven by consumer-durables and younger generations entering the formal financial system.
Non-banking finance companies now account for half of India’s new-to-credit borrowers by volume, according to a joint study by TransUnion CIBIL and the Finance Industry Development Council, a sharp rise from 24% in the same quarter a decade earlier. The finding points to a wider shift in how first-time borrowers are entering the formal financial system, with consumer-durable lending emerging as the main gateway. Banks and other lenders made up the rest. According to TransUnion CIBIL, the study examined about 2,000 NBFCs across the market’s upper, middle and lower tiers.
The product mix has changed just as dramatically. In the first half of 2026, consumer-durable loans made up 30% of all new-to-credit originations, ahead of personal loans at 12%, gold loans at 11% and two-wheeler loans at 10%. A decade earlier, the leading entry products were Kisan Credit Cards and farm loans, which together dominated the pipeline of new borrowers. TransUnion CIBIL’s market updates also show that smaller-ticket lending has been expanding quickly, with loans below ₹50,000 accounting for the vast majority of consumer-durable credit.
Bhavesh Jain, managing director and chief executive of TransUnion CIBIL, said mobile-phone financing has become the fastest-growing part of consumer-durable lending, calling a handset a natural first purchase for a young borrower. He said nearly 46% of credit originations to Generation Z borrowers in the first half of 2026 came from NBFCs, while a separate TransUnion CIBIL report found that 41% of first-time borrowers in India are from Generation Z. The company also said younger consumers continue to drive first-time borrowing in personal and consumer-durable loans.
The broader balance sheet data underscores how embedded NBFCs have become in retail lending. According to the report, NBFCs accounted for 43% of retail-loan originations by volume and 30% by value in the quarter ended June 2026, up from 33% and 22% respectively in the same period of 2016. Raman Aggarwal, chief executive of the Finance Industry Development Council, said that role makes NBFCs a key bridge into formal credit for borrowers who may later qualify for bank loans. Even so, new-to-credit customers still represent only about 10% to 15% of all loans originated across the market, with most lending still going to people who already have a credit history. Other recent industry analysis has also suggested that NBFCs are especially important in lending to women, younger consumers and borrowers outside major cities.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
