Key Points
- Uttar Pradesh’s share of credit-active consumers rose to 11 per cent from 8 per cent since 2017
- First-time borrowers fell to 13 per cent of loan originations from 32 per cent in nine years
- Highly leveraged borrowers peaked at 18 per cent of originations in FY2024 before moderating
Uttar Pradesh, Madhya Pradesh and Bihar have gained a larger share of India’s formal credit market over nine years, even as the proportion of first-time borrowers declined sharply, according to a TransUnion CIBIL study released on Thursday.
The report, titled Unlocking Access: Journey of Credit Expansion in India, showed that first-time borrowers accounted for just 13 per cent of quarterly retail loan originations in March 2026, down from 32 per cent in March 2017. The decline suggests a larger share of lending now goes to people who already have a formal borrowing history rather than those entering the credit system for the first time.
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The number of Indians considered eligible for retail credit rose to 89 crore in March 2026 from 79 crore in March 2017. Within this population, the proportion that had used formal retail credit at least once more than doubled to 74 per cent from 35 per cent.
Northern states increase their borrower share
The study revealed a clear geographic shift in the distribution of credit-active consumers. Uttar Pradesh’s share rose to 11 per cent in March 2026 from 8 per cent in March 2017, bringing it close to Maharashtra, whose share declined to 10 per cent from 12 per cent.
Madhya Pradesh’s share increased to 6 per cent from 4 per cent, while Bihar’s rose to 5 per cent from 3 per cent. West Bengal also gained one percentage point to reach 5 per cent.
Among southern markets, Tamil Nadu’s share declined to 9 per cent from 11 per cent. Karnataka remained unchanged at 7 per cent, Andhra Pradesh at 6 per cent and Telangana at 5 per cent. Gujarat also held steady at 5 per cent.
These figures represent each state’s share of credit-active consumers rather than the value of loans outstanding. A decline in a state’s percentage share does not necessarily indicate a fall in its number of borrowers, particularly as the national borrower base expanded during the period.
The composition of consumer borrowing changed substantially. Consumption-related products — including personal loans, credit cards and consumer durable loans — were held by 51 per cent of active borrowers in March 2026, up from 34 per cent in March 2017. The number of consumers using these products grew fourfold.
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By the numbers
- 13%
- First-time borrowers’ share of loan originations in March 2026
- 89 crore
- Indians eligible for retail credit in March 2026
- 11%
- Uttar Pradesh’s share of credit-active consumers
Business-oriented credit recorded the fastest growth among the categories examined. Its share increased to 9 per cent from 3 per cent, while the number of borrowers grew tenfold. This category includes individual business loans, commercial vehicle loans and construction equipment loans.
Gold loan participation rose to 22 per cent from 19 per cent. Vehicle loan participation edged up to 18 per cent from 17 per cent, while the share holding mortgages remained unchanged at 10 per cent.
Women and younger borrowers gain ground
The borrower population became more diverse during the nine-year period. Women accounted for 30 per cent of active consumers in March 2026, compared with 22 per cent in March 2017. The share of consumers aged below 35 rose to 39 per cent from 33 per cent.
People from semi-urban and rural regions increased their share to 63 per cent from 53 per cent. Among active women borrowers, the proportion from semi-urban and rural areas increased to 64 per cent from 57 per cent.
Younger borrowers showed particularly strong adoption of credit-monitoring services. The proportion of active younger consumers who monitored their credit increased to 52 per cent in March 2026 from 1 per cent in March 2018. Their participation in business-oriented lending rose to 9 per cent from 3 per cent.
The report compared repayment outcomes among subprime consumers who began using TransUnion CIBIL’s monitoring services between April 2024 and March 2025 with a risk and age-controlled group that had not monitored its credit.
After 12 months, 46 per cent of delinquent accounts among the monitoring group had returned to current status, compared with 38 per cent for non-monitoring consumers. The corresponding cure rates were 50 per cent against 42 per cent for younger borrowers, 47 per cent against 39 per cent for women and 50 per cent against 46 per cent for consumption loans.
The comparison shows an association between monitoring and improved repayment outcomes within the groups studied. It does not establish that monitoring was the sole cause of the improvement.
The expansion was accompanied by an increase in highly leveraged borrowers. Their share in new loan originations rose from 5 per cent in FY2017 to 18 per cent in FY2024, before moderating to 15 per cent in FY2026.
TransUnion CIBIL classified leveraged borrowers through proprietary indicators including credit demand, credit uptake and repayment behaviour. Higher leverage remained concentrated among younger borrowers and people making multiple credit inquiries.
In FY2026, younger consumers represented 80 per cent of leveraged originations, while those making at least three inquiries within six months accounted for 20 per cent.
The share of credit-active consumers — defined as people with at least one retail loan carrying a reported balance or limit — rose to 28 per cent of the eligible population from 11 per cent during the period.
However, the annual growth rate of the active borrower base slowed to 9 per cent between March 2024 and March 2026 from 14 per cent during the March 2017 to March 2019 period.
The report said the next phase of expansion would require lenders to reach more people outside the formal credit system while managing the financial position of existing borrowers.
Commercial credit participation declines despite larger base
The number of commercial entities considered eligible for credit increased to 8.7 crore in March 2026 from 6.3 crore in March 2021. The study included entities with credit exposure of up to ₹100 crore.
Despite the larger base, the proportion that had used commercial credit declined to 41 per cent from 50 per cent. Credit-active entities fell to 9 per cent of the eligible base from 10 per cent, while new-to-credit entities accounted for 39 per cent of originations, down from 60 per cent.
Partnerships and proprietorships accounted for 88 per cent of active entities, up from 70 per cent. The share categorised as low risk under CIBIL’s commercial ranking system increased to 37 per cent from 13 per cent.
About 18 per cent of active microfinance borrowers had a retail credit presence in March 2026, compared with 14 per cent in March 2017, although the proportion had peaked at 21 per cent in March 2024.
“Regulatory changes, digital public infrastructure, lenders, fintech companies and faster adoption of digital services have contributed to the expansion of formal credit,” said Bhavesh Jain, managing director and CEO, TransUnion CIBIL.
The company cautioned that the report is based substantially on information supplied by its member credit institutions and that the data may not be complete or suitable for a specific decision.
Your Questions, Answered
Which Indian states gained the largest share in credit expansion?
Uttar Pradesh’s share rose to 11 per cent from 8 per cent, Madhya Pradesh increased to 6 per cent from 4 per cent, and Bihar rose to 5 per cent from 3 per cent between March 2017 and March 2026.
Why has the proportion of first-time borrowers declined in India?
First-time borrowers fell to 13 per cent of loan originations from 32 per cent as a larger share of lending now goes to people who already have a formal borrowing history rather than those entering the credit system for the first time.
How has women’s participation in India’s credit market changed?
Women accounted for 30 per cent of active consumers in March 2026, up from 22 per cent in March 2017. Among active women borrowers, the share from semi-urban and rural areas increased to 64 per cent from 57 per cent.
What is the share of highly leveraged borrowers in new loan originations?
Highly leveraged borrowers’ share rose from 5 per cent in FY2017 to 18 per cent in FY2024, before moderating to 15 per cent in FY2026. Younger consumers represented 80 per cent of leveraged originations.