Over more than 160 million consumers in India are considered to be underserved with credit at the end of 2021, as per a study conducted by TransUnion CIBIL. The study on “Empowering Credit Inclusion: A Deeper Perspective On Credit Underserved and Unserved Consumers” find that around 5 percent of consumers who started as credit underserved were found to have migrated to becoming more credit active in a two-year window.
Further, the study notes that around a fourth of India’s adult population is under 30 years of age, and 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 evolved.
“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,” Kumar added.
The study notes 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 study said, “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.”
It specifically excludes newly acquired consumers who have opened their first product within the past tow years – from the underserved population, as many of those newly acquired consumers become more fully credit active soon after having their first product opened.
The study observed two cohorts of consumers 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.
For Indian consumers, TransUnion’s globaly study looked at similar dynamics of unserved and underserved consumers in multiple markets, including Canada, Columbia, Hong Kong, South Africa and the United States to get a better sense of the global market size, needs and behaviours of the underserved consumer segment.