Informal Credit in India:
Despite nearly universal bank account penetration in India, fresh data (CMIE, Piramal Enterprises) show a sharp shift by poor households towards informal borrowing, due to limited access to formal credit channels.
- Informal Credit is Credit from non-regulated entities like moneylenders, pawnshops, friends/family, chit funds.
- Typically lacks transparency, documentation, or consumer protection.
- Recent Trends and Shifts:
- 96% of Indian households have at least one bank account (NFHS-5, 2021).
- Despite this, credit access remains skewed:
- 4.2% fall in formal credit among poor households (CMIE 2023).
- 5.8% rise in informal borrowing by those earning ₹1–2 lakh annually.
- 75% of rural adults still rely on informal credit in some form (NABARD Financial Inclusion Survey, 2019).
- ₹1.4 lakh crore was the estimated outstanding informal credit as of 2022 (CRISIL report).
