Walk into a bank branch to apply for a small personal loan and you'll mostly see people over 30. That's not because young Indians aren't borrowing. It's because they've largely stopped doing it through a branch at all.
According to TransUnion CIBIL data spanning 2025 and 2026, Gen Z now makes up 41% of all new-to-credit, first-time borrowers in India, the fastest entry rate of any generation on record. And within that group, 40% choose a consumption-led product, a credit card, personal loan or consumer durable loan, as their very first credit product. Almost none of that first step happens over a bank counter.
The scale of the shift
CRIF High Mark's Bridging The Gap report puts a number on how fast this is growing: the pool of new-to-credit borrowers entering India's formal financial system grew from 3.6 crore in 2022 to 4.4 crore by February 2026. NBFCs and fintech lending platforms now support more than 60% of those new-to-credit accounts, well ahead of traditional banks.
Credit cards tell a similar story. A TransUnion CIBIL white paper, Beyond the Swipe 2026, found that half of all first-time credit card users in India are now Gen Z, and 46% of them come from semi-urban and rural markets rather than metros. As of March 2026, 50% of new-to-credit-card consumers were 30 or younger, up from 43% back in 2022.
Why the branch lost out
Part of this is simple friction. A digital lending app can verify identity through Aadhaar and PAN, run a soft credit check, and return a decision in minutes, all without the applicant leaving their phone. A branch visit involves paperwork, business hours and, for a first-time borrower with a thin credit file, a real chance of being turned away with no clear explanation.
Part of it is also what young borrowers are actually using credit for. Traditional retail lending assumed borrowers needed money for a car, a home or an emergency. Younger borrowers are increasingly using small-ticket credit for everyday consumption and lifestyle spending, categories that legacy bank underwriting was never built to serve quickly. Nearly a third of Gen Z borrowers aged 24 to 30 already had at least two active credit accounts before ever getting their first credit card, a pattern that barely existed among millennials entering the market in 2018.
The part worth taking seriously
Faster access to credit isn't automatically a good thing. The same CIBIL data shows the average outstanding balance per new-to-credit-card consumer has more than doubled, from roughly ₹31,000 to ₹65,000. About 28% of Gen Z cardholders ran up balances over ₹25,000 within three months of getting their first card, compared to around 20% of millennials at the same stage in 2018.
Easier entry into formal credit is genuinely useful for a generation that was often locked out of it before. What it doesn't change is the basic math of borrowing: every loan or credit line still needs to be paid back, on terms you should read before you accept, not after.
What to look for, wherever you borrow
If you're taking your first loan through an app rather than a branch, the questions worth asking stay the same regardless of how fast the approval was. Is the lender RBI-registered. Is the total cost, not just the headline rate, shown to you before you accept. And is there an actual person you can reach if something on your repayment schedule doesn't add up. Speed is a convenience. Those three things are the part that actually protects you.