Archive · 29 Jul 2026
NBFCs Drive India's Credit Inclusion Growth
India's household debt has grown significantly over the past decade, with non-banking financial companies (NBFCs) playing a crucial role in extending credit to underserved areas.
NBFCs have successfully provided loans for two-wheelers, consumer durables, gold loans, affordable housing, and personal loans to people who were previously considered too risky by traditional banks.
The retail lending market has grown to ₹162.7 lakh crore, with NBFCs accounting for a significant share of personal, consumer durable, and gold loans.
This growth has been driven by India's digital public infrastructure, which reduces friction and lowers costs.
However, there are still 450 million people without meaningful access to formal credit.
The Reserve Bank of India (RBI) has implemented regulations to prevent over-borrowing and ensure borrower protection.
Extending UPI-linked credit lines to NBFCs could further bridge the credit gap, but it must be done carefully to avoid financial distress.
India's household debt has grown from 33% of GDP in 2016 to 41.3% by March 2025.
NBFCs have played a pivotal role in extending credit to underserved regions and demographics.
The retail lending market is valued at ₹162.7 lakh crore, with NBFCs accounting for over 91% of personal loan originations.
More than half of two-wheeler loan originations come from regions outside the top 100 cities.
The RBI has implemented regulations to prevent over-borrowing and ensure borrower protection.
- Who
- Non-Banking Financial Companies (NBFCs) and the Reserve Bank of India (RBI)
- What
- NBFCs are driving India's credit inclusion by extending loans to underserved regions and demographics.
- When
- Household debt has grown from 33% of GDP in 2016 to 41.3% by March 2025.
- Where
- Primarily in smaller towns and regions outside the top 100 cities.
- Why
- To promote financial inclusion and provide credit access to those previously considered too small, too remote, or too risky by traditional banks.
Pro-NBFC Perspective
Regulatory Caution
Role in Financial Inclusion
Pro-NBFC Perspective
NBFCs have successfully extended credit to underserved regions and demographics, driving financial inclusion.
Regulatory Caution
While NBFCs have expanded access, there is a need for stricter regulations to prevent over-borrowing and ensure borrower protection.
Innovation and Technology
Pro-NBFC Perspective
NBFCs leverage AI and digital infrastructure to offer faster, smarter, and more responsive lending solutions.
Regulatory Caution
The use of AI and digital tools must be balanced with robust governance and data privacy measures to prevent misuse.
Credit Lines on UPI
Pro-NBFC Perspective
Extending UPI-linked credit lines to NBFCs can further bridge the credit gap and promote financial inclusion.
Regulatory Caution
UPI-linked credit lines must be carefully regulated to avoid becoming a backdoor to over-borrowing and financial distress.
- Household Debt Growth
- 33% of GDP in 2016 to 41.3% of GDP by March 2025
- Retail Lending Market
- ₹162.7 lakh crore, up 18.1% year-on-year
- NBFC Market Share
- Over 91% of personal loan originations, 86% of consumer durable loan originations, and 50% of gold loan originations
- Two-Wheeler Loan Originations
- More than half from regions outside top 100 cities
- UPI Users
- 500 million-plus users
- Credit Card Users
- Roughly 40 million unique users