Lenders can extend loans to over 16cr more Indians

MUMBAI: More than 16 crore Indians are considered credit underserved, according to credit bureau TransUnion Cibil, highlighting the potential market for loans and credit cards in the country. TransUnion Cibil, in a report released on Monday, said that of the 81 crore Indians eligible for credit, 40 are outside the formal credit system. This half does not have the required track record and is a challenge for lenders to extend credit.

Another 18 crore are already receiving formal credit, and this does not include the six crore recently acquired by banks that are yet to raise loans. The balance 16 crore are the ‘credit underserved’ or those who are appraised for credit and can increase their participation in formal lending.

The TransUnion Cibil research showed that there had been a significant increase in credit served consumers, from nine crore in 2017 to 18 crore in 2021, bringing estimated credit served levels from 12% to 22% of the adult population. The lack of credit score and credit history for unserved consumers is an impediment to getting credit opportunities, as many lenders are hesitant to extend credit to consumers without any credit history or score.

In the meantime, the share of underserved customers has gone up from 15% in 2017 to 20% in 2021. “India’s retail credit market is undergoing rapid evolution supported by the speed and scale of digital transformation. This transformation coupled with India’s demographic dividend has triggered unprecedented opportunities for driving growth and financial inclusion in the market,” said Rajesh Kumar, MD & CEO of TransUnion CIBIL.

“Our study aims to uncover the significant potential for driving speedier and sustainable financial inclusion across India. It helps the market participants better understand how many people are truly underserved from a credit perspective, while also determining paths for them to gain more credit opportunities.”