'New to credit' loan share dips to 16% in Q1 as lenders turn cautious

Only 16% of loan originations in the April-June period were classified as NTC, as against 18% in the year-ago period and 20% in 2023, according to the report by Transunion Cibil

In what can lead to concerns from a financial inclusion agenda perspective, cautious stance by lenders led to the share of new to credit (NTC) borrowers slowing down in the June quarter, a report said on Wednesday.

Only 16 per cent of loan originations in the April-June period were classified as NTC, as against 18 per cent in the year-ago period and 20 per cent in 2023, according to the report by Transunion Cibil.

"An increase in NTC percentage indicates higher financial inclusion," the leading credit information bureau said in the quarterly report.

The decrease has been the result of lenders getting "cautious", the Cibil report added.

In what may lead to more concerns, the report said the growth in credit active consumers dropped to 9 per cent for Q1FY26 as against 15 per cent in the year-ago period.

There is a "marginal stress" in repayments, the report observed, pointing to higher downgrades in the prime segment as compared to the year-ago period.

Sharing data on score migration during the three months to June, it said 25 per cent of the movements were downgrades as compared to 23 per cent in the year-ago period, while upgrades declined to 29 per cent from 31 per cent in the year-ago period.

The CIC said edelinquency for consumer durable loans witnessed a slight increasing trend for recent originations.

Except the two-wheeler and credit cards segment, which witnessed an uptick in stress, asset quality in all the segments improved during the quarter, it said.

Retail credit demand from younger consumers declined in the quarter ending June 2025, it said, pointing that growth in loan originations for younger consumers slowed to 6 per cent during the quarter under review, compared to 9 per cent in the same period last year.

However, an increase in semi-urban and rural areas has helped from an overall book expansion perspective, it said.

"India's credit landscape is evolving with resilience in semi-urban and rural demand, a strategic shift toward secured lending, and stable portfolio performance," the CIC's Managing Director and Chief Executive Bhavesh Jain said.