India's NTC Borrower Surge: Fueling Credit Growth Amid Selective Lending

India's New-to-Credit borrowers have grown to 4.4 crore, driving financial inclusion and credit expansion. Despite a selective approach by lenders, NTC borrowers account for 17.8% of new loans. Women and rural areas show increased participation, and NBFCs lead in lending. Credit behavior shows signs of improvement.

India's new-to-credit (NTC) borrower base has surged to 4.4 crore, cementing its growing significance in driving the country's credit expansion and promoting financial inclusion. Despite a more calibrated lending strategy adopted by financial institutions, NTC borrowers substantially contribute to credit growth, as revealed by a recent CRIF High Mark report.

The report highlights an increase in first-time borrowers entering the formal credit system, rising from 3.6 crore in February 2022 to 4.4 crore by February 2026, marking a compound annual growth rate of 5.1 per cent. Although these borrowers accounted for 17.8 per cent of loans originated in the past year, this marks a decline from 23.5 per cent in 2022, implying a more risk-sensitive lending approach.

NBFCs lead the charge in NTC lending, responsible for over 60 per cent of total accounts, whereas traditional banks remain cautiously restrained. The report also highlights a significant shift towards more diverse borrowers, with women's participation in NTC accounts rising from 33 per cent to 41 per cent in five years. Additionally, consumer durable loans are emerging as a primary entry point, with semi-urban and rural markets accounting for over half of NTC originations, underscoring rising demand beyond top metropolitan areas.

The 26-35 age group dominates loan originations, especially in personal and two-wheeler loans. The report underscores the positive trend in credit behavior, where 67 per cent of NTC borrowers move to low-risk categories within a year, reflecting strong repayment discipline when aligned with suitable product structures.