NABARD Study: Under 2% of Rural Households Borrow From Fintechs

27 July 20261 min read

Why in the news

Despite a vast fintech sector and strong digital public infrastructure, fintech lending has barely reached villages, a NABARD study shows.

Core finding: under 2% of rural households borrow from fintech lenders.
Preferred channel: PACS acting as Common Service Centres – trusted, nearby and offering inputs, procurement, deposits and e-services.
Market size: third-largest fintech ecosystem after the US and UK; above $400 billion by 2028-29.
Silence: the Finance Ministry, Rural Development Ministry, NABARD, RBI and FACE did not answer queries.

Credit models need digital footprints, salary slips and bureau scores that most rural borrowers lack.
Farm income is seasonal, irregular and undocumented; fintechs cannot lend against land as banks and cooperatives do.
Digital lenders charge far more than KCC credit at 7% under the Modified Interest Subvention Scheme.
Language and digital literacy gaps, hesitation over app permissions, and trust damaged by illegal loan-app scandals.
No local grievance officer; connectivity gaps.

PACS computerisation: ERP-based project of about Rs 2,516 crore for roughly one lakh PACS, uneven across states.
eKisanCredit: fully digital loan origination for cooperative banks, PACS and RRBs, tied to land records, Aadhaar, eKYC and core banking.
NABARD is working with RBI on the National Strategy for Financial Inclusion 2.0.

Test yourself

1. What share of rural households borrow from fintech entities, as per the NABARD study?

The study found fewer than 2% of rural households borrow from fintech lenders.

2. Which institutions do rural borrowers prefer, as per the NABARD study?

Villagers rely on locally trusted PACS acting as Common Service Centres.

3. eKisanCredit (eKCC), a digital loan system for cooperatives, is developed by a firm in which NABARD took a 10% stake. Name it.

NABARD bought a 10% stake in 24x7 Moneyworks, developer of eKCC, in 2025.