Lenders less likely to extend credit to new borrower now than a decade back | Finance News

Lenders are less likely to provide loans to borrowers who are new to credit, as they prefer to serve their existing customers, a leading credit information company said on Thursday.

According to TransUnion CIBIL data, only 13 per cent of overall loans in FY26 were NTC borrowers against 32 per cent in FY17 despite an expansion in the number of credit-eligible people to 89 crore from 79 crore at March 2017.

Its chief executive and managing director Bhavesh Jain said private sector lenders are least likely to entertain NTC customers, and the bulk of such borrowers are brought by public sector banks and non-bank lenders.

Jain said a particular lender’s risk appetite or credit policy would be influencing such decisions of staying away from the NTC category, and stressed that the repayment performance of the NTC category is on par with prime or near-prime borrowers.

In some cases, lenders are choosing to give credit not just to existing credit customers, but to borrowers who have a history with a particular entity itself, he added.

The overall delinquency rates have improved over the last few years when it comes to retail, including unsecured credit products like personal loans and microfinance as well, he said.

It can be noted that lenders have been focusing strongly on the retail credit segment since the asset quality review (AQR) exercise, as it offers relatively safer and higher-margin means of deploying funds.

In the case of small businesses as well, the NTC share has declined to 39 per cent in FY26 from the 60 per cent level in FY17, Jain said. However, he was quick to add that some loans by proprietors in their individual capacity would be showing up in the “enterprise” category in the individual loan segment, which has grown to 9 per cent in FY26 from 3 per cent at the end of FY17.

In the case of individuals, the number of ever-credited has grown to 74 per cent from 35 per cent in the same period, and the credit active have also shot up to 28 per cent from 11 per cent.

A majority of 51 per cent of the individual loans are ones classified as consumption loans, while the share of housing loans, which creates an asset underneath, is unchanged at 10 per cent, data showed.

Jain said pre-Covid, it was two-wheeler loans, which were the biggest draw for individuals to access credit, while it is the mobile phone now because the ubiquitous phone has come to be considered as a “productivity tool”.

The average ticket size of a consumption loan is above Rs 35,000, which is used for buying a mobile phone, mostly taken on loan from an NBFC, he said.

The report also finds that the credit growth in Uttar Pradesh, Madhya Pradesh, and Bihar outpaced the same in traditional strongholds of Tamil Nadu and Maharashtra during the same period.