Nearly Half of India's Credit-Active Consumers Hold NBFC Loans
A new report reveals NBFCs now serve 46% of credit-active consumers in India, showing massive growth in rural reach and small-ticket lending.
Non-Banking Financial Companies (NBFCs) have emerged as a powerhouse in India's financial landscape, with nearly half of the country's credit-active consumers now holding a loan from these institutions. According to a joint report by the Finance Industry Development Council (FIDC) and TransUnion CIBIL, 46 per cent of all credit-active consumers had an NBFC loan as of June 2026.
The report highlights a massive shift in how credit is accessed across the nation. While 36 per cent of credit-eligible consumers have utilized NBFCs, the total pool of active borrowers heavily relies on these non-banking entities for their financial needs.
Explosive Growth Over a Decade
The footprint of NBFCs has expanded dramatically over the last ten years. Between June 2016 and June 2026, the credit-active consumer base for NBFCs grew nearly seven times. This surge is reflected in their market share, as their portion of retail loan originations by volume climbed from 33 per cent to 43 per cent during the same decade.
Interestingly, the profile of the typical borrower is changing. The industry is moving from catering primarily to newcomers to serving more seasoned borrowers:
- First-time borrowers: Their share in NBFC originations dropped from 28 per cent in 2016 to 16 per cent in 2026.
- Credit-experienced consumers: This group has grown significantly, making up 49 per cent of the NBFC credit-active base, up from 35 per cent in 2016.
Dominance in Small-Ticket Lending
NBFCs have carved out a massive niche in the small-ticket lending segment, which is crucial for financial inclusion. Loans amounting to up to Rs 2 lakh account for a staggering 82 per cent of all consumer credit origination volumes.
In this specific segment, NBFCs are far outpacing traditional banks. They account for 47 per cent of originations for small loans, whereas banks hold only a 17 per cent share.
Reaching the Heart of India
The reach of NBFCs is no longer confined to metropolitan hubs. There has been a significant migration of credit access toward semi-urban and rural markets. The share of consumers from these areas within the NBFC credit-active base jumped from 31 per cent in June 2016 to 59 per cent by June 2026.
The borrower demographic is also becoming increasingly diverse:
- Women: Their share of the borrower base rose from 18 per cent to 27 per cent.
- Youth: Younger consumers now represent 47 per cent of the base, up from 44 per cent a decade ago.
Expansion into Commercial Lending and Portfolio Quality
Beyond individual consumers, NBFCs are making inroads into the business world. Their share of credit-active commercial entities increased from 10 per cent in June 2021 to 18 per cent in June 2026. During this period, NBFC-served entities grew 2.2 times, outperforming the overall commercial lending market growth of 1.2 times.
Despite the rapid expansion, the quality of these loan portfolios has shown marked improvement. Between June 2019 and June 2026, the share of above-prime consumers increased from 24 per cent to 32 per cent. Crucially, the 90-plus days’ balance-level delinquency saw a sharp decline, falling from 2.7 per cent to 1.1 per cent.
Bhavesh Jain, MD and CEO of TransUnion CIBIL, noted that the market is maturing. He stated that NBFCs are moving beyond first-time borrowers to serve customers with more varied financial needs and broader geographic locations. He suggested that the next phase of growth will focus on building deeper, longer-term relationships with these evolving customers.