MUMBAI: India’s formal retail credit penetration more than doubled over the past decade, with the share of consumers who accessed credit at least once rising from 35% in March 2017 to 74% in March 2026, even as the credit-eligible population expanded from 79 crore to 89 crore.The expansion was accompanied by a sharp rise in engagement, with the proportion of credit-active consumers increasing from 11% to 28%, indicating deeper participation in formal finance. According to TransUnion CIBIL’s latest report, consumption-led lending has emerged as the primary driver of this growth, with personal loans, credit cards and consumer durable loans becoming the dominant entry point into the credit system.The composition of borrower portfolios has shifted materially, with the share of credit-active consumers holding consumption products rising from 34% in 2017 to 51% in 2026, while the number of such borrowers grew fourfold. This category now accounts for the largest share of borrower wallets.

“The changes in wallet composition point to how credit is being increasingly seen as a means to drive a lifestyle-driven approach today, compared to the asset-based approach seen a decade ago. Credit dispersion has travelled a long way thanks to consumption loans,” said Bhavesh Jain, MD and CEO of TransUnion CIBIL. “For younger borrowers, mobile phones rather than two-wheelers and vehicles appear to be products of choice,” he said.Geographically, credit growth has shifted away from traditional strongholds in western and southern India towards northern and central states. Uttar Pradesh’s share of the credit-active population rose from 8% in 2017 to 11% in 2026, while Madhya Pradesh increased from 4% to 6% and Bihar from 3% to 5%. In contrast, Maharashtra and Tamil Nadu saw their shares moderate, although they remain among the largest credit markets.First-time borrowers are now more likely to start with small-ticket unsecured loans rather than large asset-backed loans such as vehicles or housing. These loans are often used to finance electronics and consumer goods.The borrower base also broadened across demographics,with increased share of women, younger borrowers under 35 years of age, and semi-urban and rural consumers, indicating wider dispersion of credit across regions and income segments.