Archive · 11 Oct 2026
Why NBFCs Are a First Choice for India’s New Borrowers
Many people taking a loan for the first time in India get that loan from an NBFC.
A report by FIDC and TransUnion CIBIL says NBFCs help bring new borrowers into the formal credit system.
They often provide smaller loans and serve people outside big cities.
In June 2026, 74% of live new-to-credit borrowers had used only NBFC loans.
Another 16% had used both NBFCs and other lenders, while 10% had used only other lenders.
NBFCs also lend to many people the report describes as below-prime borrowers.
Their credit-active customer base grew nearly seven times over the past decade.
TransUnion CIBIL’s chief executive said lenders will need to build longer relationships as customers’ needs change.
A joint Finance Industry Development Council and TransUnion CIBIL report says NBFCs are a major entry point into formal credit for new-to-credit borrowers.
As of June 2026, 74% of live new-to-credit consumers had used only NBFC credit, 10% only non-NBFC credit, and 16% both.
For loans up to ₹2 lakh, NBFCs accounted for 47% of originations, compared with banks’ 17%; these loans made up 82% of consumer-credit originations.
Semi-urban and rural markets accounted for more than 58% of NBFC loans by volume, close to banks’ 60% share.
The report says NBFCs’ credit-active consumer base grew nearly sevenfold over the decade, and they accounted for 47% of new-to-credit consumer originations by June 2026.
- Who
- NBFCs, new-to-credit borrowers, and the Finance Industry Development Council and TransUnion CIBIL, which published the report.
- What
- A report describes NBFCs’ role in expanding formal credit access and serving first-time borrowers.
- When
- The report cites lender and borrower data as of June 2026 and comparisons from June 2016 to June 2026.
- Where
- India.
- Why
- The report attributes NBFCs’ appeal to access, smaller-ticket lending, and reach beyond large urban centres.
Access and expansion
Longer-term customer relationships
NBFCs’ role in credit access
Access and expansion
FIDC CEO Raman Aggarwal said NBFCs can respond flexibly to the needs of households in smaller towns, first-time borrowers, and small businesses, and are gaining scale in emerging states and among nano and micro enterprises.
Longer-term customer relationships
The report’s findings emphasize NBFCs’ growing reach, including their role in bringing new-to-credit consumers into formal finance; it does not present a direct opposing view on this expansion.
What should come next
Access and expansion
The report highlights continued expansion across the credit spectrum, including lending to below-prime consumers.
Longer-term customer relationships
TransUnion CIBIL MD and CEO Bhavesh Jain said the next phase should build deeper, longer customer relationships as credit needs evolve, supported by credit information, consumer awareness, and a wider range of lending solutions.
- Report
- ‘Bharat Nirman: NBFC Forming the Foundation of Credit Dispersion’
- Report authors
- Finance Industry Development Council and TransUnion CIBIL
- Live new-to-credit borrowers, June 2026
- 74% had used only NBFC credit; 10% only non-NBFC credit; 16% both.
- Small-ticket lending
- Loans up to ₹2 lakh made up 82% of consumer-credit originations; NBFCs accounted for 47% of originations in this segment and banks 17%.
- Semi-urban and rural lending
- These markets represented more than 58% of NBFC loans by volume, compared with 60% for banks.
- NBFC credit-active base
- The report says it grew nearly sevenfold over the past decade, approximately 2.5 times faster than the overall credit industry.
- NBFC share of new-to-credit originations
- 47% as of June 2026, according to the report.