Why do most Indians still rely on informal loans?
India's made huge progress in getting people banked—by 2025, nearly nine out of 10 adults have a bank account, up from just a third in 2011.
But when it comes to actually borrowing money from banks or formal lenders, many Indians still face challenges.
For most low-income families and self-employed folks, this means turning to informal sources when they need cash.
Half of MSMEs still can't get formal loans
The divide hits small businesses and poorer states the hardest—over half of MSMEs still can't get formal loans.
States like Maharashtra and Kerala see more institutional lending, while places like Uttar Pradesh and Assam rely on informal borrowing.
Non-Banking Financial Companies (NBFCs) are helping bridge the gap with quicker loans, but experts say reforms are needed so more people can get safe, fair credit options.
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