Over 16 Crore Indians Are Credit Underserved; Limited To Single Loan Product: CIBIL Study


More than 16 crore Indians were credit-underserved at the end of 2021. However, about 5 per cent of consumers migrate to becoming credit-active every two years, according to a report by credit information firm TransUnion CIBIL.

“There has been a significant increase in credit-served consumers, from 9.1 crore in 2017 to 17.9 crore in 2021, bringing estimated credit served levels from 12 per cent to 22 per cent of the adult population,” the report said adding that, however, the lack of credit score and credit history for unserved consumers is an impediment for getting credit opportunities, as many lenders are hesitant to extend credit to consumers without any credit history or score.

The credit information company said the underserved consumers are those who have minimal credit participation, limited to a single type of credit product and no more than two open accounts of that type, and have been active in the credit market for at least two years.

The report said India has the highest number of credit underserved consumers at 16.4 crore, followed by US with 3.7 crore, Canada with just 75 lakh, Colombia 71 lakh, South Africa 59.6 lakh and Hong Kong 18 lakh.

“Every year, a portion of the underserved consumer population – those with minimal credit activity – become more fully credit active by opening additional credit products, while many remain in that underserved segment,” the report said. It added that about 5 per cent of consumers who started as credit underserved were found to have migrated to becoming more credit-active in a two-year window.

It added that in emerging markets like Colombia and South Africa, the product types most commonly held by underserved consumers were microcredit (37 per cent) and clothing loans (59 per cent), respectively.

“In India, agriculture and microfinance loans, two-wheelers and consumption loans (personal loan, consumer durable loan or credit card) are the most preferred products to be opened by credit underserved consumers,” the report said.

TransUnion CIBIL MD & CEO Rajesh Kumar said, “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.”

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

TranUnion CIBIL also conducted a survey, in which 27 per cent of the underserved consumers responded that they do not have sufficient access to credit. “This proportion is 58 per cent for the unserved consumer segment. About 38 per cent of underserved consumers and 65 per cent of unserved consumers responded that they were not satisfied with the current amount of credit. About 39 per cent of underserved consumers indicated that they did not need more credit as compared to 66 per cent of unserved consumers.

The survey was conducted online and included responses from 1,236 adults during April 2022 by TransUnion CIBIL in partnership with research providers OMG and YouGov.

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