India’s retail credit market reshaped by younger, more digital and increasingly aspirational borrower: Equifax

For younger borrowers, credit is increasingly becoming an instrument for mobility, consumption and income generation rather than simply a tool for major life milestones, the report said.

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From Gen Z consumers taking their first credit in their early 20s to women-led micro-ventures and rural borrowers moving beyond farm credit, India’s retail credit market is being reshaped by a younger, more digital and increasingly aspirational borrower, according to a Equifax India report. This is also being supported by the changing underwriting equation — from salary slips to digital footprints.The report “Aspirational India: Retail Credit Market Performance”finds that 8 crore aspirational borrowers accounted for 79% of India’s 14 crore retail credit originations in JFM (January-February-March) 2026, translating into ₹19 lakh crore of origination valueagainst an overall industry value of ₹24 lakh crore.Equifax India assessed that aspirational borrowers collectively accounted for ₹132 lakh crore in outstanding assets under management as of June 2026, compared with ₹167 lakh crore for the overall retail industry. Notably, 73% of aspirational credit value comes from semi-urban and rural markets, underscoring how decisively India’s credit expansion is moving beyond the largest urban centres.“India’s retail credit market is entering a new phase, one where the defining borrower is no longer the traditionally salaried, urban customer with years of bureau history, but a broader cohort of younger consumers, rural households, informal workers and emerging entrepreneurs entering formal credit through digital and alternative pathways,” per the report.For younger borrowers, credit is increasingly becoming an instrument for mobility, consumption and income generation rather than simply a tool for major life milestones, the report said.Subhankar Mishra, Interim Managing Director, Equifax India, observed that the next wave of borrowers will not be defined simply by traditional credit histories, but by the depth of their financial and transactional footprints. Gen Z consumers, women entrepreneurs and small-town businesses are already demonstrating this shift.“The real opportunity for the industry is to turn this growing visibility into responsible, sustainable credit, ensuring that greater speed and access are matched by trust and discipline,” he said.The report finds that 58.4% of retail debt is unsecured, while 31% of Gen Z consumers hold two or more active credit accounts at initial origination. Small-ticket personal loans below ₹50,000 show default rates of 6.4%, while sub-prime borrowers allocate 48% of loan proceeds towards direct lifestyle consumption.This makes responsible underwriting increasingly important as credit becomes embedded into everyday consumption. The report recommends structured EMI products, transparent credit lines and underwriting models that reward responsible repayment rather than simply maximising speed or loan frequency.The report’s analysis suggests that early low-ticket Buy Now, Pay Later, Short-Term Personal Loan and consumer credit could eventually translate into larger-ticket products such as automobiles, credit cards and home loans as these borrowers move into higher-income stages of their careers.This creates a new opportunity for lenders: the absence of a long credit history does not necessarily mean the absence of financial signals, it added.The report underscores the growing role of UPI transaction history, Account Aggregators, Unified Lending Interface (ULI), GST-linked information and other alternative datain helping lenders assess borrowers whose income may be irregular or whose financial lives do not fit traditional documentation models.The report noted that only 1.1% of the Street Vendor segment currently accesses formal credit, with an average ticket of ₹44,000; 65% are Gen Z, while 61% rely on fintech platforms for immediate credit needs.Similarly, Rural Bharat aspirants have just 0.7% NTC (new-to-credit) penetration, despite commanding a higher average initial ticket of ₹1.02 lakh. Millennials account for 41% of this segment, while female borrowers account for 47%.“Their credit journey typically begins with products such as Kisan Credit Cards, agricultural loans and personal loans before moving towards gold loans and, eventually, business credit,” the report said.So, India’s next credit opportunity may lie less in finding borrowers who look like traditional borrowers, and more in learning how to read the signals of borrowers who don’t.Equifax India said Emerging Micro-Ventures have 2.6% NTC penetration and an average ticket size of ₹1.72 lakh, with women accounting for 78% of the segment.These millennial and Gen Z women entrepreneurs are increasingly accessing unsecured business loans and gold loans to fund inventory, working capital and business expansion, marking a shift from moving more women into the formal financial system to enabling women-led enterprises to scale.Combined with Account Aggregators and ULI, AI-driven credit utility models could allow lenders to assess borrowers using live transactional signals rather than relying only on static documents and historical bureau information.Published on September 9, 2026