Share of new-to-credit customers rises to 50% in June 2026 from 24% in June 2016: TransUnion CIBIL-FIDC report

Mumbai: Non-banking finance companies (NBFC) originate about half of India's new-to-credit customers by number, up from 24% a decade ago, as consumer-durable loans increasingly bring first-time borrowers into the formal financial system.

NBFCs' share of new-to-credit, or NTC, originations rose to 50% in the three months ended June 2026 from 24% in the corresponding period of 2016, according to a report by TransUnion CIBIL and the Finance Industry Development Council. Banks and other lenders accounted for the balance.

NTC borrowers are customers taking their first loan reported to the retail credit bureau.

Consumer-durable loans have emerged as the leading product among NTC borrowers, followed by personal loans, reversing a decade-old trend when farm loans were the main entry products into formal credit.

Consumer-durable loans accounted for 30% of industry-wide NTC originations between January and June 2026, followed by personal loans at 12%, gold loans at 11% and two-wheeler loans at 10%. Other products accounted for the remaining 37%.

In the first half of 2016, Kisan Credit Cards were the leading entry product, accounting for 18% of NTC originations. Agricultural loans followed at 11%, two-wheeler loans at 10%, gold loans at 8% and consumer-durable loans at 6%. Other products made up 46%.

The study covered about 2,000 NBFCs across the upper, middle and base layers, TransUnion CIBIL said.

Bhavesh Jain, managing director and chief executive of TransUnion CIBIL, said phone financing was the fastest-growing part of consumer-durable lending.

"A mobile phone is often among the first products bought by a young borrower and provides a natural route into formal credit," Jain said.

Nearly 46% of credit originations to Generation Z borrowers in the first half of 2026 came from NBFCs, he said.

While CIBIL does not receive end-use information that would allow it to separately quantify phone loans, ticket size can be used as a broad proxy. Loans below ₹50,000 accounted for 93% of consumer-durable loans in the quarter ended June 2026. The number of such loans was 2.6 times the level recorded in the quarter ended June 2019.

Jain said consumer-durable loans had overtaken two-wheeler loans as the product bringing the largest number of NTC customers into the formal credit system. Before the COVID-19 pandemic, two-wheeler loans were the leading entry product.

He suggested that improved public transport in major locations after the pandemic may have reduced some young borrowers' need for personal vehicles, while phones have become essential for work, communication and content creation. Jain clarified that this was an observation rather than a conclusion based on reported credit data.

NBFCs accounted for 43% of retail-loan originations by volume and 30% by value in the three months ended June 2026, compared with 33% and 22%, respectively, in the corresponding period of 2016, according to the study, titled Bharat Nirman: NBFC Forming the Foundation of Credit Dispersion.

Raman Aggarwal, chief executive of FIDC, said NBFCs' 50% share of NTC customers reflected their role in bringing borrowers into the formal financial system, helping them build a credit record and potentially become eligible for bank loans later.

However, NTC customers account for only about 10% to 15% of loans originated across the market. The remaining 85% to 90% go to borrowers with an existing credit history.

The NTC share is generated largely by private, retail-focused NBFCs rather than government-owned lenders, which generally focus on infrastructure and other large-ticket financing, Agarwal said.