Prudential Supervision: Credit

Access to credit remains a major challenge for low-income individuals, underserved customer segments, and micro, nano, small, and medium enterprises. 

Traditional financial systems are often designed with middle- and upper-income borrowers in mind. This excludes large groups of people whose financial behaviours and needs do not fit neatly into standard credit models. For low-income individuals, the absence of formal credit histories, lack of collateral, and irregular income sources make them unattractive clients for incumbents. This leaves many “credit invisible”, unable to borrow formally and forced to rely on informal moneylenders who often charge exploitative interest rates.

Underserved groups, such as women and rural populations, face additional layers of exclusion. Rural communities suffer due to distance to bank branches, weak digital infrastructure, and low awareness about financial products. Women are often disadvantaged due to social norms, lower asset ownership, and limited decision-making power in financial matters.

In the interaction that follows, we explore how digital credit is evolving, the risks involved, and how prudential supervision can assist in mitigating these risks. 

Additional Reading 

To learn more about digital credit, we recommend the following as additional reading: 

• Izaguirre, J.C., Arenaza, S., Meagher, P., and Valenzuela, M. 2025, Responsible Digital Credit: Frontier Solutions for Authorities and Providers, CGAP Technical Guide, https://www.cgap.org/sites/default/files/publications/Tech%20Guide_Responsible%20Digital%20Credit_v5.pdf