As India celebrated its 77th Republic Day last week, credit remains a pivotal pillar of its broader economic journey towards becoming a global power and leaping into the top three economies. India has been at the forefront of financial evolution and innovation over the past few years.
India, today, operates the world’s most widely adopted real-time payment system through UPI, offering 24×7, near-zero-cost transactions, in contrast to developed economies that remain largely dependent on card-led, fee-intensive payment networks. In Dec 25, close to 695 million transactions were processed daily through UPI, with a value of over ₹26 Lakh crores through the month. India is also among the few countries globally to offer such a wide diversity of lending products with meaningful penetration across a vast population. What makes this achievement commendable is the country’s scale, diversity and complexity. With 28 states and eight union territories, India encompasses 22 scheduled languages and includes highly diverse geographies ranging from hilly terrains and deserts to dense metropolitan cities. Despite these hurdles, access to credit continues to expand steadily across regions and demographics.
India, as the fourth-largest global economy, underscores its vulnerability to international volatility, yet its lending sector demonstrates remarkable resilience through data-driven strategies and regulatory support. India’s GDP reached approximately USD 4.18 trillion in 2025, surpassing Japan and intertwining its fortunes with global supply chains, where exports are projected to hit $1 trillion in FY 2025-26. Heavy reliance on imported oil (90% of consumption) exposes the economy to geopolitical tensions, tariff shifts, and commodity shocks, influencing inflation, domestic demand, and credit behaviour. Despite the hurdles like pandemics, wars, and trade restrictions, robust fundamentals and RBI oversight have sustained low GNPA ratios at 2.1% as of September 2025.
India’s digital credit revolution
Credit growth has played a crucial role in powering India’s economy in multiple ways. It is driving consumption and boosting everyday spending on discretionary as well as aspirational products. The demand for credit in India has been driven by secured lending products such as car loans and home loans. While unsecured lending, such as small ticket loans, consumer durable loans and credit cards, saw a solid double-digit growth. Lending focused towards MSMEs have in turn, supported small business owner adding real momentum to our GDP growth. MSMEs, which account for nearly half of our manufacturing and employ 11 crore people, were ably supported by lending initiatives and timely credit guarantee schemes. This trend was evident across geography, reaching smaller towns as well. Lending enables business grow by supporting investment in new technology and expansion without dipping into the cash reserves. Exporters also use the working capital to produce and export more goods overseas and create jobs as credit becomes more accessible. In September 2025, total credit exposure reached ₹47.5 lakh crore, with 11% year-on-year growth, with small and medium segments leading expansion, as reported in the latest How India Lends Report, published by CRIF Highmark.
How credit is powering consumption, MSMEs, and economic momentum
Public–private partnerships have played a critical role in positioning India on the global financial innovation map in a relatively short period. India has achieved near-universal digital identity coverage, with Aadhaar covering over 90% of the adult population, whereas most developed economies continue to rely on fragmented or voluntary identification systems. The JAM Trinity – Jan Dhan, Aadhaar, and mobile penetration, supported by the extensive banking and NBFC network, has been a key enabler of India’s lending evolution. In India, approximately 85.5 per cent of households possess at least one smartphone, and similar proportions have access to the internet within the household premises. Large public sector banks have provided deep geographic penetration through their robust branch networks, while private sector banks have driven innovation. FinTech and TechFin players have further accelerated digitisation in its true sense. As per the latest How India Lends Report, published by CRIF Highmark, personal loans, which are primarily sourced through digital channels, were the largest in origination volumes at approximately 425.7 lakh loans in Q2 FY26.
These entities have worked in tandem, competing for the right borrower segments and growth opportunities, while simultaneously collaborating to build the technology and infrastructure required for sustainable growth. Technology providers have partnered with banks and large NBFCs to enable advances in verification, document validation, fraud control, and near-instant credit delivery. Paperless onboarding through e-KYC, e-sign, and DigiLocker, combined with API-based identity and income verification and automated underwriting, has significantly reduced the time and cost of credit origination in India. India has one of the lowest marginal costs of originating small-ticket loans globally, enabled by a fully digital and interoperable lending stack.
Building a resilient lending ecosystem
The lending ecosystem in India has been guided by strong regulatory guardrails. During and after the Covid period, and despite global headwinds arising from geopolitical conflicts and their impact on global trade, India continued to demonstrate robust growth and a healthy, sustainable lending portfolio. This resilience was enabled by the strong foundational framework established by lenders, operating under clear and consistent regulatory guidance. The Indian lending industry held its ground through multiple global economic disruptions without being unduly influenced by external volatility.
During the challenging Covid period, large public sector banks as well as private sector banks still operated and served their customer base, while the NBFCs and fintechs invested in strengthening technological frameworks to make digital processes more resilient and smoother. Businesses impacted by lockdowns and export restrictions were supported through government guarantee schemes and moratoriums, enabling continuity even during challenging economic periods. Through measures like stamp duty reductions as well as inflation management, lending for secured assets continued. Unlike several developed economies where lending became skewed toward unsecured, consumption-led products, delinquency and asset quality indicators in India remained range-bound. This was achieved through effective measures such as portfolio segmentation, proactive customer engagement, loan restructuring, and the development of early warning systems to anticipate and manage potential delinquencies.
Over the past decade, credit bureaus in India have emerged as reliable partners for lending institutions, extending their role beyond just enabling credit access. Their importance has increased significantly in recent years. Credit scores and bureau insights help lenders build data-driven, insight-led credit strategies that span the entire customer lifecycle and multiple customer journeys. Today, credit bureaus provide intelligence that enables lenders to identify borrowers who are not only likely to seek credit but are also creditworthy, sustainable, and profitable over the long term. In addition, credit bureaus offer early-warning, data-led insights and portfolio analytics that help lenders manage risk within their existing portfolios. Beyond supporting lenders, the credit bureaus in India are also playing an active role in borrower education and credit awareness. Credit bureaus in India play a more active and ecosystem-enabling role compared to many global peers, supporting the transition of borrowers from thin-file to thick-file credit profiles. Indian credit bureaus have significantly expanded coverage of MSMEs and new-to-credit borrowers, helping integrate previously excluded cohorts into the formal credit ecosystem.
Beyond risk assessment, credit bureaus in India have actively played a crucial role in promoting borrower education and financial awareness, strengthening responsible credit behaviour across the ecosystem. In many developed markets, the credit bureaus primarily function as passive data repositories, whereas in India, they increasingly act as growth enablers and help partners for sustainable and inclusive credit expansion. This has helped borrowers with a better understanding of their rights as well as responsibilities whenever they are accessing credit from formal institutions such as banks, NDFCs, etc. Sustainable and robust credit growth is ultimately dependent on disciplined and responsible borrower behaviour, a foundation that credit bureaus are increasingly helping to strengthen.
In the past few decades, India has made significant progress in terms of financial inclusion and continues to advance credit inclusion at scale. Access to credit and finance remains the main focus area for India’s aspiration of becoming one of the world’s largest economies. Household debt stood at 41.3 per cent of GDP as at end-March 2025, substantially lower than the 65–100% range observed across most developed economies, reflecting lower systemic leverage. This presents a substantial opportunity to strengthen, broaden and deepen credit penetration and financial inclusion. The availability of clean data, advanced analytics, and AI-driven risk models is enabling lenders to address this gap more effectively. These capabilities are not just helping institutions sustainably expand access to credit, but it is also making progress towards inclusion faster, broader, and more resilient. Going forward, the robust credit will propel India to the world’s third-largest economy by 2030 and beyond, powering infrastructure, manufacturing, and jobs. By prioritising responsibility over rapid leverage, India charts a blueprint for emerging markets worldwide.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial, legal, or professional advice. While every effort has been made to ensure accuracy, readers should verify details independently and consult relevant professionals before making financial decisions. The views expressed are based on current industry trends and regulatory frameworks, which may change over time. Neither the author nor the publisher is responsible for any decisions based on this content.
Sachin Seth, Regional MD CRIF India & South Asia
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