Mumbai, March 26 Gen Z is emerging as a major segment in India's credit market, with 41 per cent of first-time borrowers belonging to this young generation, a new report said on Wednesday.
A TransUnion CIBIL’s report showed that the lenders are actively reaching out to new borrowers, especially in rural areas and among women, to promote financial inclusion.
The report highlights that more women are entering the formal credit system, with their share in first-time loan originations at 37 per cent, higher than the 27 per cent recorded among existing borrowers.
Rural areas are also witnessing an increase in credit participation, with 32 per cent of first-time borrowers coming from these regions.
Lenders are encouraging first-time borrowers to build a strong credit history.
Data shows that one in three consumers who took their first loan in FY22-23 availed a second credit product within a year, with 44 per cent choosing the same lender.
This trend reflects growing financial awareness and trust in the credit system. India's credit-eligible population, aged 18-80 years, is around 1,036 million, and efforts are underway to bring more individuals into the formal credit network.
Gen Z forms a significant 34 per cent of this group, and as more of them enter the workforce, their participation in credit markets is expected to rise further.
The overall credit market remains stable, with secured loans showing improved repayment trends.
Personal loan delinquencies among high-risk borrowers also improved slightly, indicating responsible borrowing and repayment habits.
“Access to formal credit is a cornerstone of a stable financial ecosystem and a fundamental element for achieving financial inclusion and empowerment,” said Bhavesh Jain, MD and CEO of TransUnion CIBIL.
He added that we have seen that sustainable credit growth can be achieved among NTC (new-to-credit) consumers by lenders who use advanced information analytics and technology-based solutions.
The report also found that the credit market indicator (CMI) for credit performance improved slightly to 101 in December 2024, up from 100 in December 2023.
Serious delinquencies, or loan payments overdue by 90 days or more, improved for secured loans.
For personal loans, delinquency rates among high-risk borrowers fell to 4.54 per cent in December 2024 from 4.85 per cent a year earlier.
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