CE and CV lending in India has gone through a quiet but meaningful shift over the last two decades.
In the early years, this was largely a relationship-driven market. Credit decisions were less about structured data and more about on-ground familiarity with the borrower. NBFCs built strong positions here because they understood small fleet operators and first-time buyers far better than traditional institutions. For many of these borrowers, formal income documentation didn’t exist, so underwriting relied heavily on asset value, cash flow estimation, and local intelligence. Banks, given their risk frameworks and limited reach in these segments, stayed selective.
Between 2008 and 2015, the sector expanded alongside infrastructure growth and increased freight movement. Demand for commercial vehicles rose materially, with MHCV sales reaching close to 400,000 units in FY2012. NBFCs scaled their books during this phase, but the cyclical nature of the segment also became evident when asset quality stress surfaced during the slowdown of FY2013–14.
From 2016 onwards, structural changes began to improve how this market functioned. GST implementation, wider credit bureau coverage, and increasing digitisation created better visibility into borrower behaviour. Cash flows that were earlier opaque started leaving trails. This shift allowed lenders to move beyond purely relationship-based underwriting. Banks gradually increased their presence, particularly in new CV financing where borrower profiles were more formal and ticket sizes larger.
Even with that shift, NBFCs continue to play a dominant role. They account for roughly 60–65% of CV financing, especially in used vehicles and borrower segments that still require field-level underwriting judgement. The used CV segment itself has become central to the ecosystem, contributing over 60% of financed volumes due to lower acquisition cost and faster asset turnover.
The market has also reached significant scale. India’s CV financing ecosystem is currently estimated at around USD 75–80 billion, or ₹6–6.5 lakh crore, and is expected to grow at about 9–11% annually, supported by e-commerce expansion, infrastructure spending, and replacement demand.
What is changing now is not just the size of the market, but how decisions are being made. Lenders are increasingly relying on alternative data such as GST filings, FASTag usage, and telematics to understand utilisation and cash flows. Co-lending partnerships between banks and NBFCs are improving capital efficiency, while digital underwriting is reducing turnaround times and enabling more consistent risk assessment.
While capital and distribution remain important, competitive advantage is increasingly shifting toward underwriting precision and risk interpretation. That shift is gradually redefining how CE and CV lending operate in India today.