Summary of this article
Loan disbursals rise while credit-active consumer growth slows
Semi-urban and rural areas drive majority originations now
Prime borrowers account for most new loans issued
Loan disbursals and outstanding balances have risen, and lenders have expanded beyond metro cities. But at the same time, the pace at which new borrowers are entering the credit system has slowed down, according to a new report by TransUnion CIBIL.
The Credit Market Indicator report of December 2025 by TransUnion CIBIL has highlighted that growth in credit-active consumers stood at 9 per cent in September 2025. Credit-active consumers are those who currently hold at least one active loan. Data from both the consumer behaviour and loan origination suggests that lenders are increasing credit extensions by lending to existing consumers in addition to increasing lending in more remote regions.
Growth In Credit-Active Consumers Is Slowing
According to the report, the year-on-year (y-o-y) growth in credit-active consumers has eased over the years and stood at 9 per cent in September 2025. The pace of slowdown showed a preference among lenders to focus on borrowers with an existing credit history rather than targeting new consumers.
Incidentally, the number of consumers with active loans increased for most loan products, although at a slower rate. The rate of expansion in consumers with credit cards, personal loans, and car loans also grew at a lower rate, the report says, suggesting that even though lenders have not cut back on lending activity, there has been an increasing slowdown in the borrower base itself.
Young and New Borrowers Show Partial Recovery
According to the report, the trend in consumer behaviour has shown a partial revival in lending to youth and new-to-credit consumers. Loan to consumers below 35 years of age was up by 12 per cent y-o-y in the three months ending September 2025, while new-to-credit consumers registered an increase of 5 per cent during the same period, reversing the trend of a year ago.
Although this was an improvement, but the pace of growth in these segments remained lesser than September 2023 levels. Their overall credit demand has also seen limited growth, meaning that the revival is still in a gradual state, the report says.
However, the growth in young and new-to-credit consumers was higher in semi-urban and rural areas rather than in metro cities.
Increased Opportunities for Loan Originations
As far as the supply side was concerned, the report highlighted an increase in loan originations, particularly in consumption-driven credit. Personal loans, consumer durable loans, and gold loans grew with a strong performance y-o-y in the quarter ending September 2025.
The report said that more than 60 per cent of new lending volume originated in semi-urban and rural regions during the same period. “The trend underlines a noticeable move in new lending activity towards non-metro regions playing a more prominent role in retail credit expansion,” the report said.
“This can be attributed to higher volumes of originations in a variety of product types, in contrast to the share in the metro and urban areas, which have remained stable,” the report added.
Prime Lenders in Majority
According to the report, prime and above prime consumers contributed approximately 58 per cent of total lending in the first three months of 2025.
The state of distribution also saw overall stability and showed a good indication that borrower risk profiles have not changed in terms of geographic expansion in credit. Conversely, non-prime and new-to-credit borrowers represented a smaller portion in new lending.
Additionally, the focus on prime borrowers has supported the stability of overall credit performance, with balance-level delinquencies remaining stable and improving year-on-year in most major retail loan products.
The report further said that the slower growth in credit-active consumers highlighted a pattern of lesser onboarding of new borrowers despite increased lending. But subsequently, this pattern also offered lenders a chance to grow further by targeting new segments, which have shown early signs of revival.
