More than 16 million Indians were considered credit underserved by the end of 2021, while half of the adult population was unserved, according to a new study by TransUnion Cibil.
Out of the 81.4 crore credit-eligible population in the country, 40.8 crore or almost 50% were credit unserved while 16.4 crore or 20% were credit underserved, according to the report” Empowering Credit Inclusion: A Deeper Perspective on Credit Underserved and Unserved Consumers.
However, TransUnion CIBIL research has shown that there has been a significant increase in the number of consumers served by credit, from 9.1 crore in 2017 to 17.9 crore in 2021. This brings the estimated levels of credit served 12% to 22% of the adult population.
“The lack of credit score and credit history for unserved consumers is a barrier to obtaining credit opportunities, as many lenders are reluctant to extend credit to them without any credit history or score,” the study said, adding that for these traditionally unrated consumers, they face a “chicken or egg” conundrum of how to get that first credit product when they have no credit history.
About 5% of consumers who started with underserved credit were found to have migrated to become more active in credit within a two-year window, he added.
Unserved consumers are those who have never had a traditional credit product open, according to accounts reported in TransUnion’s consumer credit database. Underserved consumers are those with limited but limited credit presence.
“The Indian retail credit market is undergoing rapid change supported by the speed and scale of digital transformation. This transformation, coupled with India’s demographic dividend, has created unprecedented opportunities to drive growth and financial inclusion in the market,” said Rajesh Kumar, MD and CEO of TransUnion CIBIL, adding that the study aims discover the potential that exists to drive faster and more sustainable financial growth. inclusion across India.
April 25, 2022