Bajaj Finance, India’s largest non-bank lender, made a rather curious announcement on Tuesday. 

A full week before its second-quarter earnings, it sent out a press release about how festive things were. It said that during the 35 days between Dussehra and Diwali, it had disbursed 27% more consumer loans to fund the purchase of products like electronics than it did last year, and acquired 2.3 million new customers. 

Over half of them, it added, were “new-to-credit”. That is, people who’ve never borrowed before (read: without a credit history).

Now, if you follow Bajaj Finance, this kind of specificity won’t surprise you. It is famously detail-oriented. It is one company that treats “number of service requests” on its app and web to “number of UPI handles” as worthy of investor attention. But “new-to-credit” hasn’t usually been one of those details in quarterly presentations. 

Even when Bajaj disclosed it before, it was tucked away as part of financial inclusion goals—the part where companies say Look, we have a heart.

That’s because Bajaj is not the kind of lender you imagine happily giving out loans to people with no credit history. The risk, as any lender will tell you, is too high. The new-to-credit segment is where dreams of financial inclusion meet the harsh reality of defaults.

Non-banks typically lend to those new to credit when they don’t have a choice. The best borrowers end up taking loans from banks and top NBFCs like Bajaj at low interest rates. So NBFCs that don’t have the cushion of capital end up with this segment charging them higher interest rates to account for the higher default risk. 

In fact, for personal loans under Rs 1 lakh, NBFC fintechs (think Navi, Kreditbee, and Fibe) have a higher share of new-to-credit borrowers at 13.3% compared to 9% for other non-banks, according to a September report by CRIF, a credit information bureau.

While fintechs tend to have a higher appetite for risk, Bajaj historically does not. Internally, the company has always said it would rather give up growth than choose the other.

Still, it turns out that nearly half of Bajaj’s new customers actually have no credit history at all. It begins small with them lending about Rs 25,000 at a time.