· NBFCs have become a powerhouse of credit inclusion, growing their credit-active consumer base by nearly 7 times over the past decade – approximately 2.5 times faster than the overall credit industry
· 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
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.