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India’s growing appetite for retail credit is creating promising opportunities for Non-Banking Financial Companies (NBFCs) to broaden their investor base, according to a new analysis by Crisil Intelligence. The report sheds light on the strong and sustained expansion within the retail credit segment, with expectations of continued growth in the years ahead.

Crisil’s findings suggest that the surge in retail borrowing offers NBFCs and banks a chance to diversify their funding sources and engage with a broader investor audience. “The increasing demand and positive sentiments in the Indian retail credit market present an opportunity for both banks and NBFCs to broaden their investor base,” the report noted.

As more borrowers access credit through formal channels, financial institutions are now better positioned to attract new categories of investors and unlock alternative financing avenues.

Double-Digit Growth Across Segments

The Indian retail credit market has recorded a compound annual growth rate (CAGR) of 15.1 per cent between FY19 and FY25, with the total value of retail credit reaching Rs. 82 trillion by the end of FY25. For that fiscal year alone, the market expanded by 14 per cent, largely supported by consistent performance in major lending categories such as home loans and vehicle finance.

Crisil projects that this upward trend will continue, with the retail credit market expected to grow at a CAGR of 14–16 per cent between FY25 and FY28. Strong demand for credit cards, personal loans, gold loans, microfinance, and consumer durables is likely to fuel this expansion.

Credit Penetration In India Remains Relatively Low

Despite the strong growth, the report pointed out that India’s household credit-to-GDP ratio stood at just 42 per cent in calendar year 2024. This is significantly lower than China's 60 per cent, the United States' 69 per cent, and the United Kingdom’s 76 per cent—indicating considerable room for further credit penetration.

India’s total credit-to-GDP ratio in CY2024 was 93 per cent, again trailing major economies like the UK (138 per cent) and China (198 per cent), highlighting the untapped lending potential within the Indian market.

Financial Inclusion And Awareness To Drive Growth

According to the report, several structural drivers are likely to support the next phase of credit growth. These include rising financial awareness, proactive government efforts aimed at financial inclusion, and improved accessibility of credit products for underserved populations. Retail lending is expected to remain at the forefront of this trend, offering growth opportunities to both traditional lenders and NBFCs.