MUMBAI, July 30 — A fresh report from TransUnion CIBIL suggests that consumption-led lending has become the primary entry point for Indians stepping into the formal credit system. The analysis covers personal loans, credit cards, and consumer durable loans, and its findings point to a steady shift in how credit is used across the country. The share of credit-active consumers holding such products rose from 34% in March 2017 to 51% in March 2026, according to the data.
Over the same nine-year period, the number of borrowers with consumption products grew roughly fourfold. These consumption products now represent the largest component of borrower wallets—a change that early findings suggest is reshaping the lending landscape.
Consumption Lending as the Gateway
The report describes consumption-led lending as the main gateway for Indians entering the formal credit system. This is a notable departure from earlier patterns, where first-time borrowers often started with home loans or vehicle financing. Now, personal loans and credit cards appear to be introducing more people to formal credit before they take on larger, secured debt.
For consumers, the encouraging part is that access to credit is broadening. More individuals can now build a credit history through smaller, unsecured products.
However, the data also carries a note of caution: early entry into unsecured lending requires careful management. Patients—or rather, consumers—should be mindful of repayment discipline to avoid over-leverage.
A Fundamental Shift in Credit Behaviour
The fourfold growth in the number of consumption borrowers over nine years signals a fundamental shift in how credit is used. Rather than being a tool reserved for major purchases, credit is becoming a regular part of everyday spending for a growing segment of the population. The report underscores that consumption products now form the largest share of borrower wallets, a position previously held by mortgage or auto loans.
While this trend opens doors for financial inclusion, it also raises questions about long-term credit health. The report does not provide default or delinquency figures, but the rapid expansion of unsecured lending warrants attention.
Consumers should talk to their financial advisor before taking on new debt, especially if they are entering the formal system for the first time. Looking ahead, the trajectory will depend on how borrowers manage these new credit lines and how lenders adapt their risk models. The encouraging part is that more Indians are gaining a foothold in formal finance.
As always, the best next step is to consult your financial advisor to ensure credit supports long-term goals rather than short-term strain.
