According to TransUnion Cibil study, about 50 per cent adult population is credit unserved
Over 16 crore Indians were considered to be credit underserved by the end of 2021 while half of the adult population was unserved, according to a new study by TransUnion Cibil.
Of the 81.4 crore credit eligible population in the country, 40.8 crore or nearly 50 per cent was credit unserved while 16.4 crore or 20 per cent was credit underserved, according to the report “Empowering Credit Inclusion: A Deeper Perspective on Credit Underserved and Unserved Consumers.
However, the TransUnion CIBIL research showed that there has been a significant increase in credit served consumers, from 9.1 crore in 2017 to 17.9 crore in 2021. This brings the estimated credit served levels from 12 per cent to 22 per cent of the adult population.
“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 them without any credit history or score,” said the study, adding that for these traditionally unscorable consumers, they face a ‘chicken or egg’ conundrum of how to get that first credit product when they lack a credit history.
About five 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 further said.
Unserved consumers are those that have never had an open traditional credit product, based on reported accounts on the TransUnion consumer credit database. Underserved consumers are those with some, but limited, credit presence.
“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 and CEO of TransUnion CIBIL, adding that the study aims to uncover the potential that exists for driving speedier and sustainable financial inclusion across India.
Published on April 25, 2022