Despite stricter lending norms imposed by the Reserve Bank of India (RBI), the number of first-time borrowers in the country climbed to 4.4 crore in the financial year 2023-24, according to a report by credit information company TransUnion CIBIL and financial services firm Fiserv.
Rise in First-Time Borrowers
The report highlights that the share of first-time borrowers in total credit inquiries increased to 21% in FY24, up from 19% in the previous fiscal year. This growth was driven primarily by demand for home loans, personal loans, and credit cards.
Despite the tightening of lending norms by the RBI to curb unsecured lending, the report indicates that lenders continued to cater to new-to-credit customers, especially in the affordable housing segment and for small-ticket personal loans.
Regional Trends and Demographics
Geographically, the top five states accounting for the highest number of first-time borrowers were Maharashtra, Uttar Pradesh, Tamil Nadu, Karnataka, and Gujarat. Together, they contributed to over 50% of the new borrower additions.
The report also noted a shift in demographics, with younger borrowers (aged 25-35) forming a significant chunk of first-time borrowers, indicating increased financial inclusion and credit awareness among the youth.
Impact of Tighter Norms
The RBI had tightened norms for personal loans and credit cards in November 2023, increasing risk weights on such loans to discourage excessive borrowing. However, the report suggests that the impact on first-time borrowers was limited, as lenders focused on low-ticket loans and secured products like home loans.
“Despite regulatory tightening, first-time borrowers continued to access credit, reflecting the underlying demand and improving credit infrastructure,” said a senior official from TransUnion CIBIL.
Future Outlook
The report projects that the number of first-time borrowers could cross 5 crore in FY25, driven by the government’s push for financial inclusion and the expansion of digital lending platforms. However, it also cautions that lenders need to maintain robust underwriting standards to avoid a rise in delinquencies.
Overall, the data underscores the resilience of credit demand in India, even as regulators aim to ensure responsible lending practices.
