Non-banking financial companies (NBFCs) have become the entry point into formal financing in India. They constitute almost half (47%) of all consumer financing by June 2026. As per a collaborative report by Finance Industry Development Council (FIDC) and TransUnion CIBL, 36% of the consumers availed themselves of the loans through NBFCs. Though 46% of all credit-active consumers (consumers or institutions having an active (live) loan or credit card account) have taken loans from the NBFCs, the report indicates that the NBFCs have grown consistently over the past decade, growing their credit-active consumer base by about seven times and rising their share of retail loan disbursements from 33% to 43%. Moreover, the share of first-time borrowers in the loans disbursements made by the NBFCs has come down from 28% in June 2016 to 16% in June 2026. This implies that NBFCs are gradually catering to consumers who have a prior credit experience. Although NBFCs made up 43% of all retail loan disbursements by volume, they accounted for 30% by value in June 2026, reflecting their strong presence in small loans and diverse customer needs.

The report states that NBFCs continue to hold a strong position in small loans. Loans up to ₹2 lakh represent 82% of the industry, with NBFCs contributing 47% to the category, compared to 17% for banks. NBFCs account for 58% of total lending in semi-urban and rural markets, making them almost equal to banks at 60%. This penetration is also reflected in the changing landscape of NBFCs' credit-active consumer base.

Between June 2016 and June 2026, the share of consumers in semi-urban and rural markets increased from 31 percent to 59 percent. During this period, the share of women increased from 18 percent to 27 percent, credit-experienced consumers from 35 percent to 49 percent, and young consumers from 44 percent to 47 percent. This clearly indicates a growing and diversifying borrower base.

The report highlighted that, as NBFC banks are reaching more and more borrowers, the loan product needs of consumers are also changing. Consumption loans accounted for 51 percent of total NBFC loans to active consumers in June 2016, rising to 62 percent in June 2026, while business loans increased from 4 percent to 11 percent.

Meanwhile, the share of auto loans in total NBFC consumer loans declined from 27% to 24%, while the share of mortgage loans declined from 10% to 7%. According to the report, 74% of formal loan borrowers who had active loans in June 2026 remained with NBFCs during the six months ending June 2024, indicating that many first-time borrowers maintain their relationship with the sector over time.

Non-banking financial companies (NBFCs) have become the entry point into formal financing in India. They constitute almost half (47%) of all consumer financing by June 2026. As per a collaborative report by Finance Industry Development Council (FIDC) and TransUnion CIBL, 36% of the consumers availed themselves of the loans through NBFCs. Though 46% of all credit-active consumers (consumers or institutions having an active (live) loan or credit card account) have taken loans from the NBFCs, the report indicates that the NBFCs have grown consistently over the past decade, growing their credit-active consumer base by about seven times and rising their share of retail loan disbursements from 33% to 43%. Moreover, the share of first-time borrowers in the loans disbursements made by the NBFCs has come down from 28% in June 2016 to 16% in June 2026. This implies that NBFCs are gradually catering to consumers who have a prior credit experience. Although NBFCs made up 43% of all retail loan disbursements by volume, they accounted for 30% by value in June 2026, reflecting their strong presence in small loans and diverse customer needs.

The report states that NBFCs continue to hold a strong position in small loans. Loans up to ₹2 lakh represent 82% of the industry, with NBFCs contributing 47% to the category, compared to 17% for banks. NBFCs account for 58% of total lending in semi-urban and rural markets, making them almost equal to banks at 60%. This penetration is also reflected in the changing landscape of NBFCs' credit-active consumer base.

Between June 2016 and June 2026, the share of consumers in semi-urban and rural markets increased from 31 percent to 59 percent. During this period, the share of women increased from 18 percent to 27 percent, credit-experienced consumers from 35 percent to 49 percent, and young consumers from 44 percent to 47 percent. This clearly indicates a growing and diversifying borrower base.

The report highlighted that, as NBFC banks are reaching more and more borrowers, the loan product needs of consumers are also changing. Consumption loans accounted for 51 percent of total NBFC loans to active consumers in June 2016, rising to 62 percent in June 2026, while business loans increased from 4 percent to 11 percent.

Meanwhile, the share of auto loans in total NBFC consumer loans declined from 27% to 24%, while the share of mortgage loans declined from 10% to 7%. According to the report, 74% of formal loan borrowers who had active loans in June 2026 remained with NBFCs during the six months ending June 2024, indicating that many first-time borrowers maintain their relationship with the sector over time.