New Delhi | Jagran Business Desk: As per a global study conducted by the credit information company, TransUnion Cibil, around 480 million adults in India till the age of 65, representing half of the overall population in the earning segment, are 'credit unserved', An additional 164 million were classified as 'credit underserved', while only 179 million fit into the 'credit served' category.

What does this mean? All you need to know

What is credit unserved/ underserved/ served?

Credit Unserved consumers are those that have never had an open traditional credit product while Credit Underserved consumers are those who have some, but limited, credit presence. On the other hand, Credit Served consumers are those who have a credit history which means they have taken loans.

What does the study say?

The study states that although specific efforts are being taken by the policy apparatus to deepen the credit culture in the country to ensure that borrowers do not fall prey to usurious moneylenders, the number of credit unserved consumers is high.

Only 3 per cent of US adults are credit unserved, while the number is 7 per cent in Canada, 44 per cent in Colombia and 51 per cent in South Africa, the report said.

"Although India has made great strides in increasing levels of credit inclusion across the country in recent years, the current reality highlights the importance of incorporating enriched credit data into the lending ecosystem, so that fewer consumers find themselves as credit unserved," said Rajesh Kumar, the managing director and chief executive of Cibil.

Why does it matter?

Admitting that it is a "chicken and egg" situation when it comes to unserved consumers, the report said a lack of credit score and credit history for unserved consumers is an impediment for getting credit opportunities, as many lenders are hesitant to extend loans to consumers without any credit history or score.

Further, the study found that about 5 per cent of consumers who started as credit underserved were found to have migrated to becoming more credit active in a two-year window.

It specifically excluded newly acquired consumers -- those who have opened their first product within the past two years -- from the underserved population, as many of those newly acquired consumers become more fully credit active soon after opening their first product, the report said, pegging such newly acquired customers' numbers at 63 million.

(With inputs from PTI)

Posted By: Sugandha Jha