The personal loan portfolio of digital NBFCs is expected to exceed ₹3.6 lakh crore by FY30, translating into a CAGR of 26%–28% over FY25–FY30. Growth prospects remain strong, driven by increasing digital penetration and an expanding borrower base, according to a CareEdge report.
Outstanding Personal Loan Portfolio Doubles
As per data from the Fintech Association for Consumer Empowerment (FACE), the outstanding personal loan portfolio of digital NBFCs reached ₹1.3 lakh crore as of September 2025, compared with ₹0.6 lakh crore as of March 2023, reflecting a two-fold increase over 2.5 years.
Digital NBFCs also witnessed a modest rise in average ticket size, from ₹12,967 in FY23 to ₹15,177 in H1 FY26.
Digital Lending Among Fastest-Growing Financial Ecosystems Globally
The rise of digital lenders has significantly expanded access to credit, particularly for underserved segments such as MSMEs, non-salaried individuals, including freelancers, and new-to-credit customers.
Leveraging the India Stack, comprising smartphones, Aadhaar-enabled e-KYC, and UPI, digital NBFCs are able to offer instant, paperless loans, effectively overcoming traditional barriers such as collateral requirements and complex approval processes.
High-Risk, High-Yield Nature of Small-Ticket Loan Portfolios
Profitability among major digital NBFCs remains range-bound, with return on assets (ROA) typically ranging between 1% and 4%. This underscores the high-risk, high-yield nature of small-ticket, unsecured loan portfolios, as well as the reliance on efficient digital distribution models.
At the same time, digital NBFCs maintain strong capital adequacy, supported by continued funding from institutional and venture investors.
Digital Lending Offers Clear Advantages in Accessibility and Speed
Co-lending partnerships between banks and digital NBFCs have further strengthened credit reach and facilitated risk-sharing. Digital lending continues to offer clear advantages in accessibility, speed, customer convenience, and financial inclusion.
The RBI’s digital lending guidelines now mandate explicit borrower consent, key fact statements, and prohibit automatic credit limit enhancements to safeguard consumers.
While asset quality has shown improvement, risks persist in high-growth unsecured portfolios, with retail NPAs increasingly concentrated in personal loans. Balancing innovation with prudent risk management and regulatory compliance will be critical for sustaining growth and credibility in India’s financial ecosystem.
Urban Demand Drives Growth
Urban markets remain the primary focus for digital and other NBFCs, accounting for a significant share of loan sanctions in H1 FY26.
This concentration reflects strong demand from a tech-savvy, credit-aware population, supported by higher income visibility, formal employment structures, and deeper digital infrastructure penetration, enabling seamless onboarding and faster credit disbursal.