India’s Digital Credit Boom Moves Beyond Metros, Led By Tier-II Cities: Report

The Indian digital credit landscape is increasingly being shaped by a diverse borrower base, with borrowers concentrated beyond metropolitan cities. The Digital Credit and Inclusion Index (DCII) 2026, based on a survey of 5,149 respondents across 100 cities in 20 states, gives India an overall score of 55.85, placing it in the “Emerging and Served” category. The index measures digital credit inclusion across three pillars: access, adoption, and impact.

Tier II Cities Take The Lead

The report shows a clear and dynamic shift in the geography of digital borrowing. While Tier I cities continue to lead in the digital payments landscape, Tier II cities sit at a higher score when it comes to digital credit. Tier II cities recorded an average DCII score of 58.64, as compared to 53.1 for Tier I and 55.77 for Tier III. The report highlights how the Tier II cities lead in all demographic categories such as age, gender, income, occupation and education.

Cities like Coimbatore, Nagpur, Jodhpur, Indore, Prayagraj, Ranchi and Ludhiana feature among the locations where digital borrowing is concentrated. The Tier II advantage is also quite visible in gender inclusion. The divide between males and females in digital credit inclusion is 2.8 points in Tier II cities, which is significantly narrower than the 9.1-point gap which is recorded in Tier I cities.

Income And Employment Remain Critical

However, geography is not the only factor that determines access to digital credit. The report identifies income and occupation as major enablers of inclusion. Salaried employees and businesspersons are the strongest users of credit.

The data highlights the role of formal employment in narrowing the gender gap. Overall, men score 57.9 compared with 53.8 for women. But among the salaried respondents, women scored 62.0, which is significantly ahead of men, who stand at 60.2.

These numbers suggest that economic opportunity and access to formal income are important determinants of digital credit participation.

Credit Is Still Largely Funding Consumption

Digital credit has moved beyond being a niche product, but borrowing remains selective rather than routine. The report records an adoption score of 57.17, while productive use stays much lower at 43.2. Almost 59 per cent of respondents said that they had used digital credit to purchase high-value electronics or home appliances through instalments. By contrast, productive borrowing for activities such as upskilling, asset creation or income generation remains limited.

The findings of the report point to the next phase of India’s digital credit journey. Expanding purposeful borrowing, improving borrower confidence and ensuring greater access translates into stronger financial resilience.