Formal retail credit access doubles over past decade
- IBEF
- August 3, 2026
India's formal retail credit ecosystem has expanded significantly over the past decade, with the share of consumers accessing formal credit at least once increasing from 35% in March 2017 to 74% in March 2026, according to the latest TransUnion CIBIL report. The expansion came despite the credit-eligible population rising from 79 crore to 89 crore, reflecting broader financial inclusion across the country. The proportion of active borrowers also more than doubled from 11% to 28%, indicating stronger engagement with formal financial services. Consumption-led lending emerged as the primary growth driver, with personal loans, credit cards and consumer durable loans becoming the preferred entry point into the formal credit system. The share of credit-active consumers holding consumption credit products increased from 34% in 2017 to 51% in 2026, while the number of such borrowers grew fourfold, highlighting the increasing role of retail credit in supporting consumer spending.
The report also highlighted a broader geographic and demographic expansion of formal credit. Northern and central states recorded stronger participation, with Uttar Pradesh's share of the credit-active population increasing from 8% to 11%, Madhya Pradesh's from 4% to 6%, and Bihar's from 3% to 5% between 2017 and 2026. First-time borrowers are increasingly opting for small-ticket unsecured loans to finance consumer goods and electronics rather than traditional asset-backed loans. The borrower base has also become more diverse, with greater participation from women, borrowers below 35 years of age, and semi-urban and rural consumers, reflecting wider access to formal credit across regions and income groups. The expanding adoption of formal retail credit is expected to strengthen financial inclusion, support domestic consumption and contribute to India's evolving consumer-driven economy.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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