50% Working Indians Already Have A Credit Card Or Active Loan: Rural India Next Destination For Growth?

According to a research released on Tuesday by a credit information company (CIC), half of the country’s working population of 400 million people is credit active, owning at least one loan or credit card.

According to the Transunion CIBIL study, credit institutions are rapidly approaching saturation in terms of new consumers, with over half of borrowers coming from a bank’s existing customer base.

According To The CIC Data

According to the report, India’s entire working population was anticipated to be 400.7 million in January 2021, with 200 million credit active individuals in the retail credit sector.

It should be highlighted that there have indeed long been concerns about borrowers falling into the clutches of unregulated usurious money lenders, and attempts have been made to broaden access to financing.

In the new to credit (NTC) universe, there is a higher preference for products including personal loans and consumer durable loans in the segments of under-30 years and ones residing outside tier-I cities, it said.

The composition of women, however, continues to be much lower in the NTC segment, it said, pointing out that the composition of female borrowers was only 15 per cent in auto loans, 31 per cent in home loans, 22 per cent in personal loans and 25 per cent in consumer durable loans.

The CIC’s data also suggests that NTC consumers demonstrate higher loyalty to the credit institution that has provided them their first credit opportunity, the report said.

Assessing Credit Risk

Borrowers also tend to prioritise payment on the first credit facility over the second in times of financial stress, it said.

“Identifying emerging NTC consumers across segments and enabling access to financial opportunities for them is vital for driving economic resurgence and sustainable financial inclusion in our country,” the CIC’s managing director and chief executive Rajesh Kumar said.

He also added that lenders can assess credit risk associated with NTC customers as well with a product of the CIC for improving turnaround time and reducing cost of acquisition.

The ‘CreditVision NTC’ scoring model is based on an algorithm that uses application and enquiry information of the borrower to help better assess their eligibility.