Only 28% of India’s 89 crore credit-eligible adults are currently borrowing, leaving approximately 60 crore potential borrowers with limited or no formal credit history, according to Data Sutram’s FinSecure 2026 report.
The report said India will need to significantly expand its private credit ecosystem while broadening and diversifying its borrower base as it works towards its ambition of becoming a $30 trillion economy by 2047.
Data Sutram estimates that India’s private credit stock will need to rise from approximately $4 trillion to $45 trillion over the next 21 years, implying annual growth of 12.2% in dollar terms.
Private credit currently stands at 102.3% of GDP, compared with 132.6% in the UK, 140.3% in the US and 200.8% in China, based on BIS data cited in the report.
The report said traditional credit bureau data can be limited for first-time borrowers because credit histories are primarily built through previous borrowing. The share of new-to-credit consumers in originations has declined from 23.5% to 17.8% over four years, according to CRIF.
“India has built world-class rails for identity and payments. The next step is to build equally robust rails for trust. Lenders need the ability to assess first-time borrowers while identifying fraudulent and mule accounts in real time. As India moves towards Viksit Bharat, trust infrastructure will play an increasingly important role in enabling responsible and inclusive credit growth,” Rajit Bhattacharya, Co-Founder and CEO of Data Sutram, said.
Secured lending, fraud pose challenges
The report said secured lending continues to involve paperwork, limited information and lengthy processing. Large-ticket credit often requires property, financial and legal documentation.
Of the 8.56 crore income tax returns filed in FY25, only 11.4 lakh were filed by companies and 16.6 lakh by firms, the report said. It added that only 41% of MSMEs had accessed formal credit.
On fraud, the report cited TransUnion data showing a suspected digital fraud rate of 7.1% of transactions in India, compared with a global rate of 3.8%.
The Indian Cyber Crime Coordination Centre recorded losses of ₹22,495 crore across 28.15 lakh complaints in 2025, with investment scams accounting for 76% of the value, according to the report.
Financial fraud networks use mule accounts, synthetic identities and organised scam infrastructure, the report said, adding that financial institutions need real-time detection and prevention as transactions become more automated.
Gen Z, rural borrowers and AI
The report said Gen Z accounts for half of new-to-credit-card consumers. The generation represents 34% of the eligible population, while credit penetration stands at 16%.
Semi-urban and rural India accounted for 46% of new-to-credit consumers, according to the report. More than 25 crore Indians use feature phones, most of them on 2G, citing data from IDC and Counterpoint.
In microfinance, 1.8 crore borrowers exited between June 2024 and March 2026, while the average ticket size increased 23%. Portfolio at risk for more than 180 days tripled to 16.3%, the report said.
Data Sutram identified four areas where AI could support credit expansion and fraud prevention: real-time large-ticket lending, real-time fraud detection, AI-led underwriting for Gen Z and voice-based rural financial services.
For large-ticket lending, the report said consent-based Account Aggregator data, GST data and bank statements can support document verification, due diligence and credit memo preparation. The Account Aggregator ecosystem has crossed 538 million consents, according to the report.
For fraud prevention, AI can help identify mule accounts before transactions, detect synthetic identities during onboarding and distinguish legitimate activity from automated or fraudulent activity, the report said.
For Gen Z, AI-led underwriting can use behavioural and alternative signals during transactions, with credit decisions integrated into the purchasing journey.
The report also said voice-based financial services in local languages could support applications, verification, repayment and servicing in rural areas without requiring an app or smartphone.
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