First-time borrowers climb to 4.4 crore despite tighter lending norms: Report

New Delhi: India's new-to-credit (NTC) borrower base has risen to 4.4 crore, highlighting its growing role in driving credit growth and financial inclusion, even as lenders adopt a more calibrated and selective approach, according to a report by CRIF High Mark.

The report, titled highlighted that the number of first-time borrowers entering the formal credit system has steadily increased from 3.6 crore in the 12 months ending February 2022 to 4.4 crore in the 12 months ending February 2026, reflecting a compound annual growth rate of 5.1 per cent.

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Despite tighter underwriting by financial institutions, NTC borrowers continue to play a significant role in credit expansion, accounting for 17.8 per cent of overall borrowers originating loans in the 12 months ending February 2026. However, this share has declined from 23.5 per cent in the corresponding period of 2022, indicating a more risk-calibrated lending approach.

A key trend identified in the report is the rising participation of women borrowers, whose share in NTC accounts has increased from 33 per cent to 41 per cent over the past five years, pointing to improved financial inclusion and growing entrepreneurial activity.

The report noted that non-banking financial companies (NBFCs) continue to lead NTC lending, contributing over 60 per cent of total accounts, while banks remain relatively cautious. Consumer durable loans emerged as the primary entry point into formal credit, accounting for 32 per cent of NTC accounts, followed by gold and two-wheeler loans.

It also highlighted a clear borrower progression pattern, with individuals typically starting with small-ticket loans and gradually moving towards more structured credit products. The 26-35 age group accounted for the majority of originations across key loan categories, while younger borrowers dominated segments such as personal and two-wheeler loans.

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Geographically, more than half of NTC originations were concentrated in markets beyond the top 100 cities, indicating strong demand from semi-urban and rural areas.

The report underscores that "while lenders are becoming more selective, the NTC segment continues to offer scalable, calibrated growth opportunities, particularly across emerging geographies and younger demographics."

The report further pointed to improving credit behaviour, "nearly 67% of NTC borrowers transition to low-risk or very low-risk categories within one year of entering the formal credit system, indicating strong repayment discipline when supported by appropriate product structures and risk-calibrated lending."