Digital Credit and Inclusion Index: Borrowers from Tier II cities are driving India’s digital credit story, finds report

When it comes to India's digital credit story, it is the tier 2 cities that are leading the charge, according to findings from the Digital Credit & Inclusion Index (DCII) 2026, conducted by the Pahlé India Foundation and Amazon Pay.

Tier-2 cities lead digital credit and inclusion in the country, with an average score of 58.64, ahead of Tier-1 and Tier-3 cities, the report added.

DCII surveyed over 5,100 respondents across 100 cities in 20 states to examine who accesses digital credit, how easily and frequently they use it, why they borrow, whether they trust it, and whether its use contributes to stronger financial outcomes. This goes “beyond existing benchmarks that largely track payment adoption or aggregate loan volumes”, as per the official release.

India achieves national DCII score of 55.85 out of 100

The study found that India has a national DCII score of 55.85 out of 100, placing the country in the “Emerging and Served” category (51–75) and reflecting a maturing ecosystem where payment infrastructure and digital loan awareness are well established.

• Access is the strongest pillar at 61.24, followed closely by adoption at 57.17.
• Impact which is the measure of whether digital credit is making households more financially secure lags at 49.16.

“This shows that India has made significant progress in expanding access to digital credit. The next opportunity is to deepen trust and adoption, help consumers borrow more purposefully, build confidence in digital credit on par with digital payments, and translate access into measurable financial resilience and savings outcome,” the report noted.

DCII 2026: Here are the key findings for India

According to Vikas Bansal, CEO of Amazon Pay India the finding that Tier-2 cities lead digital credit inclusion signals where the next wave of growth could emerge.

Tier-2 borrowers are driving India’s digital credit story

• As per the report, there is a shift in the geography of digital borrowing. It noted that Tier-2 cities lead digital credit inclusion across age, gender, income, occupation and education, with an average score of 58.64, compared with 53.1 for Tier-1 and 55.7 for Tier-3 cities.
• While Tier-1 cities continue to lead in digital payments, Tier-2 cities are emerging as the strongest centres of digital credit adoption.
• Coimbatore, Surat, Nagpur, Indore, Prayagraj, Ranchi, Ghaziabad and Ludhiana are among the cities driving this growth. Tier-2 cities also show the narrowest gender gap in digital credit inclusion—2.8 points, compared with 9.1 points in Tier-1 cities—suggesting that stronger adoption is also accompanied by more balanced participation.

Gender gap in digital credit narrowing

• The report added that economic agency is a powerful enabler of women’s financial inclusion. While men score higher than women overall on digital credit inclusion, the gap reverses among salaried respondents.
• Salaried women record a DCII score of 62.0, compared with 60.2 for salaried men.
• The trend is also narrowing across generations. The gender gap narrows to 2.9 points among respondents aged 18–29, compared with 4.6 points among those aged 60 and above.
• The findings suggest that equal economic access, particularly through formal salaried employment, can help close—and even reverse—the gender gap in digital credit inclusion.

Awareness achieved, next challenge is trust and impact

• Awareness is no longer the primary barrier, as per the report, which noted that 94.4% of respondents know of at least one form of digital credit. Trust, however, remains a challenge.
• Confidence in digital borrowing stands at 52.5, compared with 69.7 for digital payments—a 17-point gap that underscores the need to bring greater trust, transparency and simplicity to the borrowing experience.
• Digital credit also plays a limited role during financial stress. When respondents last faced a cash shortfall, 48.2% turned to savings, while only 6.9% used a digital loan app and 3.4% used Buy Now, Pay Later (BNPL).
• Thus, digital credit may be increasingly available, but it has yet to become a meaningful financial cushion.

Participation growing, but credit visibility uneven

• The report added that benefits of this momentum are uneven, where the DCII highlights a persistent structural challenge: being digitally active does not necessarily make someone visible to the formal credit system.
• Homemakers, gig workers, daily-wage earners, students and others outside of formal salaried employment scores around 11 points lower than salaried and business respondents on digital credit inclusion.
• Closely linked to income and occupation, this divide highlights the need to complement traditional income documentation with digital transaction histories and cash-flow-based assessments, particularly for self-employed, gig and other irregular-income workers.

From consumption to productive use

• Digital credit is largely used for consumption, with 59% of respondents using it to purchase electronics and home appliances.
• Productive use of digital credit such as investing in a business, building assets, or supporting financial planning—remains relatively low, with a score of 43.2.
• However, it rises significantly among frequent users with 64% reporting using digital credit productively. This suggests that as people become more familiar with digital credit, they are more likely to use it for longer-term financial goals.
• The next goal is not simply acquiring new users—it is deepening the habits of existing ones.

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