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TransUnion CIBIL releases study that highlights the importance of credit inclusion


More than 160 Million Indians are Credit Underserved Approximately 5% Migrate to Being Credit Active Every Two Years


TransUnion CIBIL releases study that highlights the importance of credit inclusion


Mumbai, April 25, 2022 – More than 160 million consumers were considered to be underserved2 in India at the end of 2021, according to a new global TransUnion study – “Empowering Credit Inclusion: A Deeper Perspective on Credit Underserved and Unserved Consumers.” The study found that about 5% of consumers who started as credit underserved were found to have migrated to becoming more credit active in a two-year window.

The study findings are being shared as part of TransUnion CIBIL’s ongoing commitment to improving financial inclusion and awareness across India so more consumers are able to participate in the formal credit economy. With about a fourth of India’s adult population under 30 years of age, the new research is very timely. This group of consumers is most likely to seek their first ever loan or credit card from banks and credit institutions as their financial needs evolve.

“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 & CEO of TransUnion CIBIL. “Our 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.”


The study explores the characteristics and behaviours of credit underserved consumers and their overall sentiments towards credit, while offering key insights into the credit journeys of these consumers. 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.


This study specifically excludes newly acquired consumers – those who have opened their first product within the past two years – from the underserved population, as many of those newly acquired consumers become more fully credit active soon after opening their first product. The study sought to understand those consumers who remain underserved over a longer time period.

Two cohorts of consumers were studied, each over a two-year time period – the first during the pre-pandemic period beginning March 2018 through March 2020, and the second beginning in June 2019 and studied through the pandemic time period of June 2021, to determine if there were any pandemic-related shifts with consumer credit migration trends.

In addition to India, TransUnion’s global study looked at similar dynamics of unserved and underserved consumers in multiple markets, including Canada, Colombia, Hong Kong, South Africa and the United States, to get a better sense of the global market size, needs and behaviors of the underserved consumer segment.


Increased credit inclusion in India over a four-year period

The TransUnion CIBIL research showed that there has been a significant increase in credit served consumers, from 91 million in 2017 to 179 million in 2021, bringing estimated credit served levels from 12% to 22% 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 consumers without any credit history or score. 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.


“Although India has made great strides in increasing levels of credit inclusion across the country in recent years, the current reality highlights the importance of incorporating enriched credit data into the lending ecosystem, so that fewer consumers find themselves as credit unserved. Once these consumers can be evaluated by financial institutions, lenders can better determine where there might be new opportunities for growth and how they can expand credit inclusion further,” said Kumar.


In recognition of this problem, last year TransUnion CIBIL launched its CreditVision® New-to-Credit (NTC) Score to help drive greater credit inclusion by enabling banks and lending institutions to provide access to credit for consumers seeking loans for the first time.


Once Underserved Consumers Become Credit Served, They are Likely to Apply for More Credit

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. To better understand how underserved consumers transitioned to becoming more fully credit active, the study looked at additional credit products opened by these consumers within the two-year period.


In wider TransUnion global study, we found that in other emerging markets like Colombia and South Africa, the product types most commonly held by underserved consumers were microcredit (37%) and clothing loans (59%), respectively. In India, agriculture and micro finance 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 study also found that the performance of credit underserved consumers opening additional products and becoming served is not very different from credit established consumers.



Unserved or Underserved? Survey Confirms Varying Levels of Credit Satisfaction

TransUnion CIBIL also commissioned an in-region survey3 to gather sentiment from underserved and unserved consumers on the topic of credit. The findings revealed consumer beliefs, attitudes and experiences with credit that may be influencing current and future behaviors.


Key findings of the survey include:


(a) 27% of the underserved consumers responded that they do not have sufficient access to credit. This proportion is 58% for the unserved consumer segment.

(b) 38% of underserved consumers and 65% of unserved consumers responded that they were not satisfied with the current amount of credit.

(c) 39% of the underserved consumers indicated that they did not need more credit as compared to 66% of unserved consumers. Both consumer segments specified the top reason as higher interest rates charged by financial institutions.

(d) 84% of underserved consumers and 35% of the unserved consumers, indicated that they plan to apply for new credit in the next six months. The top two credit products these consumers plan to apply for are credit cards and personal loans.


“Promoting financial inclusion starts with gathering a better understanding of the different nuances between the unserved, underserved and served populations and what makes them tick. For example, what drives unserved consumers to apply for credit, and why underserved consumers may need a different credit product, may vary greatly. As lenders are better able to meet the unique needs of these consumer segments, and educate these unserved and underserved segments on ways they can build and improve their credit profiles, a larger percentage of consumers will become actively engaged in the credit system,” concluded Kumar.


1. Unserved: Consumers that have never had an open traditional credit product, based on reported accounts on the TransUnion consumer credit database. To size the unserved population, we started with the total credit eligible adult population available in World Bank database. We then subtracted underserved, new to credit and served consumers. The remaining number is the unserved.


2. Underserved: Consumers with some, but limited, credit presence. Specifically, they have:

· Been active in the credit market for at least the past 2 years

· 0-2 currently open traditional credit accounts

· Only ever held 1 type of credit product


3. TransUnion CIBIL’s online survey included responses from 1,236 adults and was conducted in April 2022 by TransUnion CIBIL in partnership with third-party research provider [OMG and YouGov].

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