Credit Growth Accelerates in December Quarter, Driven by Gold Loans and First-Time Borrowers: TransUnion CIBIL Report

India's Credit Market Shows Steady Improvement, According to TransUnion CIBIL Report

India's credit market is exhibiting signs of steady improvement, according to TransUnion CIBIL's March 2026 Credit Market Report. The report assesses the health of the credit market by examining factors such as loan demand, supply, consumer behavior, and performance. A key indicator used to track the credit market is the Consumer Credit Market Indicator (CMI), which measures the overall strength of the credit system.

The CMI has risen to 102 in the December 2025 quarter, up from 97 a year ago and 100 in the previous quarter. This marks the third consecutive quarter of growth, indicating a strengthening of the credit system. The improvement was largely driven by a significant increase in gold loans, as higher gold prices encouraged people to borrow against their jewelry.

The CMI takes into account four key areas: demand, supply, consumer behavior, and performance. These factors together provide a comprehensive picture of the credit market's health. A higher score indicates better conditions.

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The report highlights a shift in retail credit growth dynamics, with momentum extending beyond secured products such as gold loans to rising consumption demand from first-time and younger borrowers. While the post-festive moderation in credit supply reflects seasonal trends, the overall improvement in credit performance reinforces the strength and maturity of India's credit market.

Demand for credit increased to 96, largely driven by borrowers in semi-urban and rural areas. These borrowers now account for 54% of the total, up by three percentage points from last year. The share of first-time borrowers also rose to 15%, indicating that more people are entering the formal credit system.

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On the supply side, the index rose to 98, primarily due to gold loans. The average gold loan size has increased significantly since March 2023 and now stands at approximately Rs 1.9 lakh. Gold loans account for 36% of total loan volume and 39% of value, making them the largest category in retail lending.

Geographically, gold loans are no longer limited to southern states. States like Uttar Pradesh, Madhya Pradesh, and Rajasthan have seen strong growth. The first-time borrower segment also grew by 7%, driven by personal loans and consumer durable loans. Younger borrowers under 35 now form 58% of this segment.

Meanwhile, loan repayment performance improved, with fewer borrowers defaulting. This pushed the performance index up to 107. Overall, the report suggests that India's credit system is expanding steadily, with more young and first-time borrowers entering the market and lenders maintaining better control over risks.