Page 56 - Banking Finance November 2025

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Is digital future defined by credit scores

W hen you start any loan application online - workers, start-up employees, and digital creators, who now
whether through NetBanking or a fintech app,
make up a large share of the workforce.
the first message you see is: "We will fetch your
credit bureau report." Have you wondered how many But, for new-to-credit (NTC) customers, the story is very
people in India actually have a bureau score? And is different.
someone's repayment capacity really defined by just that
number? What if you don't have a score at all? Less than 16 per cent of all new loan originations in Q4 of
FY25 went to NTC (New-to-credit) borrowers, down from
That's where smart underwriting steps in. It is reshaping the 23 per cent in the same period. In unsecured personal loans,
credit industry in India. the numbers drop to 10 per cent, and for ticket sizes above
Rs. 50,000, it falls further to 7-8 per cent.
No longer enough for a digital-first India
This creates a paradox. Salaried employees keep getting
Among those aged 18-25, only 11 per cent have an active
loan product. That means the remaining 89 per cent have credit for leisure spending, vacations, new gadgets, and
even cosmetic surgeries, which in turn makes their credit
little to no exposure to credit.
history stronger. Meanwhile, an independent CA struggles
to get a small business loan. Most start-up employees are
Now, imagine someone in that 89 per cent who is earning
also turned away if their companies are not on lenders'
steadily, saving responsibly, and even maintaining a healthy
cash flow. None of this is recognised by most lenders. "approved employer" lists.

In a country, where Gen Z and millennials are redefining The Gen Z Paradox: India's most
how we work and earn, relying solely on bureau data isn't excluded borrowers
just outdated, it's exclusionary.
Gen Z is financially stable by every measure, except one:
bureau scores. They earn through gigs, creator platforms,
Why traditional underwriting is failing and micro-entrepreneurship. They spend almost entirely

new borrowers online, with every transaction as proof.
Even today, the lending ecosystem assumes that every
A PayPal receipt, a delayed electricity bill, or even a traffic
working professional earns a fixed salary. And as a result,
challan - each is a data-point in their financial story. Yet none
they are granted instant low-interest loan approvals (based
of this counts in the traditional credit system. And that needs
on their bureau score, and sometimes with no collateral)
and credit cards with outrageous limits. to change.
And while the Indian economy is undergoing a major shift, The Untapped Billion
lenders are completely disregarding freelancers, gig India cannot unlock its full credit potential by relying on

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