· NBFCs continue to expand access across the credit spectrum, while leading lending to below prime consumers, who make up 35% of their credit-active consumers base

· NBFCs have established themselves as the lender of choice for small-ticket credit, accounting for 47% of loan originations below ₹2 lakh

Mumbai, India, 5 October, 2026: Non-Banking Financial Companies (NBFCs) have become a major gateway to formal credit in India, accounting for nearly half (47%) of New-to-Credit (NTC) consumer originations as of June 2026. Today, 36% of credit-eligible consumers have accessed credit through an NBFC, while 46% of all credit-active consumers hold an NBFC loan, according to Bharat Nirman: NBFC Forming the Foundation of Credit Dispersion, a joint report by the Finance Industry Development Council (FIDC) and TransUnion CIBIL.

NBFCs have grown steadily over the past decade, with their credit-active consumer base expanding nearly sevenfold and their share of retail loan originations rising from 33% to 43%. At the same time, first-time borrowers accounted for a smaller share of NBFC originations, declining from 28% in June 2016 to 16% in June 2026, showing that NBFCs are increasingly serving borrowers who already have a credit history. While NBFCs accounted for 43% of retail loan originations by volume, their share by value stood at 30% in June 2026, reflecting their strong presence in smaller-ticket lending and the opportunity to serve customers across larger and more diverse credit needs.

Chart 1: Growth in NBFC Credit-Active Consumers and Their Balances

Indexed to June 2016 = 100

Smaller-Ticket Lending and Deeper Reach Have Helped Build Scale

NBFCs have built a strong presence in smaller-ticket lending. Loans of up to ₹2 lakh account for 82% of consumer credit industry origination volumes, and NBFCs contribute 47% of originations in this segment, compared with 17% for banks. Their reach is also strong beyond large urban centres. Semi-urban and rural (SuRu) markets account for more than 58% of NBFC loans by volume, putting them nearly on par with banks at 60%.

This reach is reflected in the changing composition of the NBFC credit-active consumer base. Between June 2016 and June 2026, the share of consumers from semi-urban and rural markets increased from 31% to 59%. Over the same period, women’s share rose from 18% to 27%, credit-experienced² consumers from 35% to 49%, and younger consumers³ from 44% to 47%, pointing to a broader and increasingly more diverse borrower base.

Chart 2: Share of NBFC Credit-Active Consumers

Bhavesh Jain, MD & CEO, TransUnion CIBIL, said: “The NBFC sector has come a long way over the last decade and today plays a much larger role in how credit reaches consumers across India. Its reach now extends well beyond first-time borrowers, with a growing presence among customers who are more experienced with credit and have more varied financial needs. We are also seeing the borrower base become broader across geographies and consumer segments, which reflects how the market itself is maturing. The next phase will be about building deeper and longer relationships with customers as their credit needs evolve over time. Credit information, stronger consumer awareness and a wider range of lending solutions will become increasingly important in making those relationships more meaningful. As this evolution continues, NBFCs will remain an important part of expanding access, improving credit outcomes and supporting sustainable growth across India’s credit ecosystem.”

Borrower Credit Needs Are Becoming More Diverse

As NBFCs reach a wider set of borrowers, the mix of credit products consumers use is changing too. Consumption credit increased from 51% of NBFC credit-active consumer wallets in June 2016 to 62% in June 2026, while business-oriented credit rose from 4% to 11%. Over the same period, vehicle credit as a composition of NBFC consumer’s wallet declined from 27% to 24% and mortgage credit from 10% to 7%.

Among NBFC NTC consumers who entered formal credit during the six months ended June 2024 and still had a live loan in June 2026, 74% remained exclusively with NBFCs, showing that many first-time borrowers continue their relationship with the sector over time.

NBFC Growth Has Come With Improving Portfolio Quality

NBFCs have continued to serve below prime¹ consumers while increasing their presence among prime and above prime borrowers. Between June 2019 and June 2026, the share of above prime consumers rose from 24% to 32%, while 90+ days balance-level delinquency declined from 2.7% to 1.1%.

Credit awareness also strengthened, with the share of NBFC consumers monitoring their credit rising from 3% in June 2018 to 48% in June 2026. Credit-monitoring consumers also showed better repayment recovery, with 52% of previously delinquent accounts returning to regular repayment within 12 months, compared with 48% among similar non-monitoring consumers.

Raman Aggarwal, CEO, FIDC, said: “The NBFC sector today is far more deeply embedded in India’s credit system than it was a decade ago. Its strength has always been the ability to respond to markets that require flexibility, whether that is a household in a smaller town, a first-time borrower or a small business looking for capital. We are now seeing that capability translate into greater scale across emerging states and a stronger presence among nano and micro enterprises.

“That same reach is increasingly visible on the enterprise side, where NBFCs are serving a wider range of businesses and building a stronger presence among more established borrowers,” he added. “This is a more mature NBFC sector, with a larger role in financing enterprise , economic activity and consumption across India. As the country’s credit requirements grow, the sector’s ability to combine reach, innovation and responsible lending will remain central to its contribution to the economy. This is where FIDC as the SRO shall play a vital role

Commercial Lending Is Emerging as Another Area of NBFC Growth

NBFCs are also expanding their presence in commercial lending. Their share of credit-active commercial entities increased from 10% in June 2021 to 18% in June 2026, with NBFC-served entities growing 2.2 times compared with 1.2 times growth in the overall commercial lending market. This expansion is visible across key borrower segments, with the share of partnership and proprietorship entities among credit active entities serviced by NBFCs increased from 73% to 82%, while low-risk⁵ commercial entities increased from 14% to 51%. The growing focus on lower-risk businesses points to NBFCs strengthening their position beyond traditionally underserved segments and into mainstream commercial lending.

Chart 3: Share of NBFC Credit-Active Entities

The Next Opportunity Lies in Deeper Relationships and Broader Product Participation

First-time borrower growth is beginning to moderate, placing greater focus on how NBFCs engage customers beyond their entry into formal credit. The opportunity ahead lies in staying relevant through more stages of the credit journey as borrower needs broaden and credit profiles mature.

Deeper relationships, greater credit awareness and a wider range of lending solutions can support that progression. The sector’s growing reach across consumers, geographies and businesses places NBFCs at the centre of the next phase of credit expansion, with a continuing role in widening access, supporting enterprise and contributing to inclusive growth.

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¹ Updated score ranges for Enhanced CreditVision score are: Subprime = 300-670; Near prime = 671-730; Prime = 731-800; Prime plus = 801-850; Super prime = 851-900

² Credit Experienced are consumers who have been in the retail bureau for more than 5 years

³ Younger Consumers are aged less than 35 years

⁴ Credit-monitoring consumers are consumers who monitored their credit with TransUnion CIBIL in last one year from period end

⁵ Low Risk - CIBIL Commercial Rank (1-3)

Mumbai, India, 14 April, 2026: Gold loans have grown rapidly to become India’s second-largest retail credit product by balance share¹. According to TransUnion CIBIL’s Gold Loan Landscape Report, gold loan balances have grown 3.8x since March 2022, with their share in India’s retail credit portfolio rising from 5.9% to 11.1% by December 2025. The growth reflects rising borrower adoption, higher ticket sizes, broader lender participation, and a borrower profile that increasingly includes consumers and women borrowers with more extensive credit histories.

The report shows that growth in the segment has been especially strong among NBFCs, which increased their share of gold loan balances from 7% in March 2022 to 11% in December 2025, and public sector banks which increased from 57% to 62% over the same period. The average gold loan balance per account increased from ₹1.1 lakh in March 2022 to ₹1.9 lakh in December 2025, underlining the rising scale of borrowing in the segment.

Chart 1: Gold Loan Industry Supply (Indexed)*

Note: Quarter ended March ’22 indexed at 100

Supply trends point to a sharp expansion in market activity. Gold loan origination volumes have grown 2.3x since Q1 2022, while origination value has increased 5.1x over the same period. The average ticket size rose from ₹90,000 in Q1 2022 to ₹1.96 lakh in Q4 2025, indicating that the market is not only widening in reach but also moving toward higher-value borrowing.

Borrower profiles are also changing. The share of prime and above prime² borrowers in gold loan originations rose from 43% in 2022 to around 52% in 2025, while New-to-Credit participation declined from 12% to 6%. This suggests that gold loans are becoming more broad-based and diverse in the borrower profiles.

Mr. Bhavesh Jain, MD and CEO, TransUnion CIBIL, said, “Gold has always held deep financial and cultural relevance in India, but what we are seeing now is a structural shift in how gold-backed borrowing is being used. Gold loans are increasingly becoming a mainstream, organised and accessible form of secured credit. Their rapid growth reflects both lender confidence and rising consumer acceptance.

“What is particularly notable is that the segment is drawing more borrowers with stronger credit profiles, larger ticket sizes and repeat usage. This is an indication that gold loans are no longer being used only for short-term liquidity needs but are becoming part of broader household borrowing behaviour,” he added.

A Broader Borrower Base is Driving Expansion

Women borrowers have emerged as an important growth driver in gold loans’ expansion. Women accounted for 39% of gold loan originations by volume in 2025, up from 36% in 2022, with strong growth visible not only in southern markets but also across western and northern states. The report highlights notable momentum among women borrowers in states such as Telangana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh, reflecting the broadening geography of demand.

The report also points to changing borrower leverage patterns. The average outstanding amount per borrower rose from ₹1.9 lakh in December 2022 to ₹3.1 lakh in December 2025, while the number of borrowers with gold loan exposure above ₹2.5 lakh increased to 14% of total borrowers at the end  of 2025, up from 10% in 2022. Borrowers with higher existing balances and greater unsecured exposure have also become more prominent at origination, indicating that gold loans are increasingly sitting alongside other forms of credit in borrower wallets.

Growth Must Be Balanced With Stronger Risk Discipline

The report also highlights the need for sharper borrower-level risk assessment as the segment grows. Based on the study, for gold loans originated in the six months ended June 2025, overall delinquency was 1.1% (delinquency being measured as any trade reported as 60 days past due within six months of origination). Borrowers whose post-origination gold loan outstanding amount exceeded ₹2.5 lakh showed a delinquency incidence of 1.5%, about 2.2x that of borrowers with lower exposure, at 0.7%. In addition, wallet concentration in gold loans, recent delinquency and high dependence on gold loans within the overall borrower wallet are important forward-risk indicators.

The report further notes that borrowers with a history of serious delinquency who subsequently rely on gold loans face a significantly higher risk of disengagement from the formal credit system. Their credit-access closure rate was around 1.6x higher than that of non-defaulting borrowers, suggesting that for a section of stressed borrowers, gold loans may increasingly be functioning as a product of last resort.

Mr. Jain added, “As the gold loan segment expands, lenders’ priority must be to balance growth with prudence. Collateral strength remains important, but it cannot be the sole criterion for evaluating borrowers. Lenders will need to assess total borrower indebtedness, repayment capacity, recent credit behaviour and cross-lender exposure more holistically. Stronger borrower-level loan-to-value checks, risk-based pricing, and closer monitoring of repeat reliance on gold loans will be essential to ensure that this important segment continues to grow in a sustainable and responsible way.”

¹ Housing Loans with 27.8% share by balance as of December 2025 forms the largest retail credit product

² CreditVision® (CV) score ranges are: Subprime 300–680; near prime 681–730; prime 731–770; prime plus 771–790; super prime 791-900