Borrower

A borrower is any individual, business, government, or institution that receives funds from a lender with a contractual obligation to repay the principal amount — along with agreed interest — over a specified period according to a predefined repayment schedule. Borrowers access credit for various purposes: retail borrowers take home loans, car loans, personal loans, and education loans; business borrowers use working capital loans, term loans, and commercial paper for operational and capital expenditure needs; and government borrowers issue bonds and treasury bills to fund fiscal deficits. The creditworthiness of a borrower — assessed through credit ratings (by agencies such as CRISIL, ICRA, and CARE for corporates, or CIBIL for individuals) — determines the interest rate, loan terms, and collateral requirements imposed by the lender. In India, the RBI regulates the credit relationship between borrowers and lenders through prudential norms on exposure limits, provisioning requirements, and the Insolvency and Bankruptcy Code (IBC) for resolution of defaulting corporate borrowers. For bond market investors, the borrower (bond issuer) is the entity whose credit risk the investor is exposed to — government borrowers (sovereign) carry the lowest risk, while lower-rated corporate borrowers carry higher default risk compensated by wider credit spreads over the risk-free rate. India's credit market has been transformed by digital lending and fintech platforms that extend credit to previously underserved borrowers using alternative data and AI-driven credit assessment models.