Summary of this article
Young borrowers account for 79 per cent of retail credit.
Rural and semi-urban markets drive much of this growth.
Digital data is reshaping how lenders assess borrowers.
India’s retail credit market is seeing more young consumers enter formal borrowing, with loans being used for consumption, mobility, and income-related needs. Digital platforms are also becoming an important route for younger borrowers seeking credit.
A broader group of “aspirational borrowers” accounted for 79 per cent of India’s 140 million retail credit originations between January and March 2026, with originations worth Rs 19 lakh crore, according to Equifax India’s Aspirational India: Retail Credit Market Performance report. Semi-urban and rural markets accounted for 73 per cent of the total credit value among these borrowers.
Gen Z Enters Credit Market Earlier
Among lifestyle seekers, only 1 per cent currently have formal credit, but their average initial ticket size is around Rs 67,000. Gen Z accounts for 55 per cent of this segment, while millennials account for 31 per cent.
Around 68 per cent lifestyle seekers use fintech platforms for products, such as consumer loans, two-wheeler finance, and credit cards. As of June 2026, aspirational borrowers had Rs 132 lakh crore in outstanding assets under management, compared to Rs 167 lakh crore for the overall retail credit industry.
Digital Data Gains Importance
Many first-time borrowers do not have long credit histories or regular salary records. Digital financial activity could give lenders additional information about their income and spending patterns, according to the report.
The report said that Unified Payments Interface (UPI), account aggregators, Unified Lending Interface (ULI), Goods and Services Tax (GST)-linked information, and other alternative data can be used for credit assessment.
Street vendors are one example, the report said. Only 1.10 per cent of the segment currently accesses formal credit, with an average initial ticket size of Rs 44,000. Gen Z accounts for 65 per cent of the segment, while 61 per cent use fintech platforms for their credit needs.
Rural Borrowers And Women Entrepreneurs
Among rural borrowers, the new-to-credit (NTC) penetration is 0.70 per cent, with an average initial ticket size of Rs 1.02 lakh. Women account for 47 per cent of this segment. Women also make up 78 per cent of emerging micro-ventures. This segment has a 2.60 per cent new-to-credit penetration and an average ticket size of Rs 1.72 lakh.
Borrowers in this group use unsecured business loans and gold loans for inventory, working capital, and business expansion. Cash-flow-based assessment can provide another way to assess businesses with limited traditional documents or collateral, the report added.
Unsecured Credit Brings Risks
The report also highlighted risks linked to unsecured borrowing. Unsecured loans account for 58.40 per cent of retail debt, while 31 per cent of Gen Z borrowers have two or more active credit accounts at initial origination.
Personal loans below Rs 50,000 have a 6.40 per cent default rate. Among sub-prime borrowers, 48 per cent of loan proceeds go towards direct lifestyle consumption. The report has recommended structured equated monthly instalment (EMI) products, transparent credit lines, and greater focus on repayment behaviour. Artificial intelligence (AI), ULI, and account aggregators could also help lenders assess borrowers using current transaction data.
