Why NBFCs have become the option of choice for many first-timer borrowers — Explained

A joint FIDC–TransUnion CIBIL report says NBFCs are the main entry point to formal credit for many first-time borrowers. As of June 2026, 74% of live new-to-credit customers had used only NBFC credit, reflecting lenders’ reach and role in expanding access.

A higher proportion of new-to-credit (NTC) customers are choosing non-banking financial companies (NBFCs) to make their foray into the borrowing space, according to a joint report by the Finance Industry Development Council (FIDC) and TransUnion CIBIL.

The report titled ‘Bharat Nirman: NBFC Forming the Foundation of Credit Dispersion’ found that a growing number of first-time borrowers start their credit journey with consumption products and are serviced mainly by NBFCs.

Raman Aggarwal, CEO of FIDC noted that the NBFC sector today is far more deeply embedded in India’s credit system than it was a decade ago. “Its strength has always been the ability to respond to markets that require flexibility, whether that is a household in a smaller town, a first-time borrower or a small business looking for capital. We are now seeing that capability translate into greater scale across emerging states and a stronger presence among nano and micro enterprises,” he added.

Why are first-time borrowers relying on NBFCs?

According to the report, the answer is access. “NBFCs have played a pivotal role in expanding formal credit access, consistently driving growth in NTC consumer originations. As of the latest period, they bring in close to half of NTC consumers into the formal financial ecosystem,” it added.

As per the data, of the lender mix data for live NTC consumers as of June 2026, as many as 74% of first-timer borrowers have only used NBFC credit, while 10% have used non-NBFC and 16% have accessed both.

Smaller-ticket lending and deeper reach have helped build this scale, as per the report. It highlighted: