Access to credit has never been easier in India – there are personal loan apps, instant approval platforms, BNPL options, small-ticket digital loans, gold-backed credit, and more. However, many first-time applicants still struggle to access formal credit. Some get rejected. Some hesitate to apply. Others qualify but feel unsure about proceeding. The gap between availability and accessibility is still very real.
TransUnion CIBIL data shows the share of new-to-credit borrowers fell from 22% in 2024 to 16% in January 2026. After a phase of rapid expansion, many lenders have become more cautious and prioritizing customers with repayment history and stronger credit scores.
Without repayment history, traditional underwriting systems struggle to assess risk. Even when income is stable and the borrower has genuine repayment capacity, the absence of historical data becomes a concern. It is a paradox – you need credit history to get credit, but you need credit to build credit history.
NTC Borrower Challenges
The struggle is also about clarity and confidence. A first-time borrower can be overwhelmed by terminology – processing fees, interest calculations, reducing balance rates and prepayment charges. Many applicants can’t compare offers or understand the true cost of borrowing. Also, first-time borrowers are often charged higher interest rates because they are classified as higher risk.
Without financial literacy, it becomes difficult to judge whether the pricing is fair. A practical fix is to make pricing easier to compare. When lenders and platforms show one clear ‘all-in cost’ view at the start – monthly EMI, total repayment, processing fees, and penalties, all in plain language – borrowers make better choices and avoid bad debt.
Trust plays an important role as well. The rapid rise of digital lending platforms has created convenience, but news around aggressive recovery practices or hidden charges has made some borrowers hesitant.
Why FY 26-27 Feels Different
This financial year is beginning to show a shift. First, lenders are increasingly using alternative data such as utility payments, salary inflows, digital transaction patterns, GST records for small businesses, and other behavioral indicators to create a more complete financial picture and assess stability for NTC segment.
Another important shift is small-ticket loan use. Loans below ₹10,000 are no longer just short-term cash solutions. They are increasingly becoming a starting point for first-time borrowers. CRIF High Mark data shows that the volume of such loans increased from 19% of all new loans in FY22 to 27% in FY26. Compared to 4 years ago, these smaller loans now make up a much larger share of new lending. They help borrowers enter the formal credit system, build repayment history, and prove reliability, while taking minimum risk.
Also, co-lending partnerships between banks and NBFCs are expanding, allowing lenders to share risk and extend credit to segments that were previously considered difficult. This improves reach into tier 2 & 3 markets, where many first-time borrowers are concentrated.
A Behavioral Shift
Younger consumers today are more comfortable with digital journeys. They expect instant decisions, clear EMI breakdowns, and transparent repayment structures. When they can see exactly what the monthly outflow looks like, decision-making becomes easier. The conversation is shifting from ‘Can I get approved?’ to ‘Does this structure work for me?’ This is a significant behavioral evolution. Borrowers used to primarily seek availability – now they also seek predictability and clarity.
The Opportunity Ahead
Access is becoming smarter. Data models are becoming more nuanced. Regulatory frameworks are becoming more borrower-focused. And lenders are recognizing that first-time borrowers are not inherently high-risk, they are simply under-documented. For a first-time borrower, approval is not just a transaction – it is an entry into the formal financial system. It builds credit history. It unlocks future opportunities. It enables entrepreneurship, education, and asset creation.
The goal is not to push credit to everyone just to grow disbursals. The goal is to help first-time borrowers enter formal credit safely, with clear pricing, manageable EMIs, and loan sizes that match their cash flow. When access is responsible, it builds credit history and confidence without pushing people into repayment stress.
When systems move from product-driven to inclusion-driven thinking, the gap between intent and access begins to close. That is the real change we are beginning to see this FY.
