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What is the story about?
India's digital personal loan market continued its rapid expansion in FY26, with digital-first non-banking financial companies (NBFCs) disbursing 132 million loans worth ₹2.15 lakh crore.
That's 77% of all personal loan sanctions by volume and 19% by value, according to a new report by the Fintech Association for Consumer Empowerment (FACE) based on data from CRIF High Mark (an RBI-licensed credit bureau).
The data suggests that digital lenders are increasingly becoming the primary channel for small-ticket consumer credit, particularly among younger borrowers and customers outside major metros.
The report shows that while banks continue to dominate personal lending by value with a 61% share, digital shadow banks now account for more than three-fourths of all personal loan accounts originated in the country. Their average ticket size stood at ₹16,238 in FY26, compared with ₹90,547 for other NBFCs and ₹4.9 lakh for banks.
Read more: RBI spent on avg over $1 billion daily in two weeks defending the rupeeGrowth Shifts From Volume To Value
While sanction volume growth for digital NBFCs has slowed sharply from 80% in FY23 to 12% in FY26, sanction value growth accelerated to 39% in FY26 from 19% a year earlier.
The divergence suggests lenders are moving toward larger ticket sizes and more established borrowers rather than pursuing growth solely through customer acquisition.
Average ticket size jumped 24% in FY26 to ₹16,238, reversing a decline seen in the previous year. The share of loans above ₹5 lakh also increased to 10% from 8% a year ago.
In the March quarter of FY26, sanction value surged 57% year-on-year to ₹62,194 crore even as sanction volume growth moderated, highlighting the ongoing shift toward larger-ticket lending.
"On the back of enabling regulatory guidelines, the digital lending sector has phenomenally matured to serve the borrowers across segments and product preferences at scale. The sector is very excited and confident about meeting India's evolving credit needs. Advancements in technology, the digital economy, and the muscle-strength industry have developed over time, will support deepening and diversification in digital lending to serve consumers with highly personalised products. All we need is firm anchoring in responsible lending and consumer-centricity to truly improve consumers' financial health," Sugandh Saxena, CEO of FACE, said.
Outstanding Loan Book Reaches ₹1.43 Lakh Crore
The total outstanding digital personal loan portfolio reached ₹1.43 lakh crore as of March 2026, up from ₹1.11 lakh crore a year earlier. Active loan accounts stood at 5.5 crore.
Digital NBFCs now account for 45% of all active personal loan accounts in the country but only 9% of the total personal loan book by value, gaining share in small-ticket lending.
Read more: This Indian multi-bagger has weathered both Trump tariffs and the war so far Young India Drives Digital Credit Demand
Borrowers below 35 years accounted for 58% of the sanctioned loan value during FY26, reinforcing the role of digital channels as the preferred source of credit for younger consumers. Customers aged 26-35 alone accounted for 45% of total sanctions by value.
Growth was particularly strong among younger and newer-to-credit borrowers. Loan sanctions to borrowers under 25 years grew 102% year-on-year, while sanctions to customers with less than one year of bureau history surged 125%.
At the same time, the customer base is becoming more seasoned. More than 60% of the sanctioned value came from borrowers with a bureau vintage of over 5 years, indicating that digital lenders are increasingly catering to experienced credit users as well.
Beyond Metros
The report highlights the growing penetration of digital lending outside India's largest cities.
Nearly 39% of the sanctioned value came from Tier III cities and beyond, while 37% originated from rural areas. Over the last four years, the share of Tier III and smaller locations has steadily increased from 32% to 39%.
Among states, Telangana posted the highest growth in sanctioned value during FY26 at 50%, followed by Andhra Pradesh at 46% and Uttar Pradesh at 46%.
Women Borrowers Still Underrepresented
Despite gradual improvement, women still account for only 18% of the sanctioned value in the digital personal loan market. However, female participation has risen steadily from 14% in FY23 to 18% in FY26.
The report notes that the gender composition of digital lending is broadly similar to that of banks and traditional NBFCs, indicating wider structural challenges in women's access to formal credit.
Asset Quality Improves
One of the more notable findings is the improvement in portfolio quality.
The share of loans overdue by more than 90 days fell to 1.4% in March 2026 from 3.3% in March 2023, reflecting stronger underwriting and portfolio management practices across the industry.
Delinquency levels were highest among borrowers with one to two years of bureau vintage at 1.9%.
1.8% of younger borrowers, below 25 years, recorded a days past due (DPD) ratio of over 90 days.
Even so, asset quality remained relatively stable across geographies and customer segments.
Read more: Global investors pull out a decade’s worth of India equity inflows
That's 77% of all personal loan sanctions by volume and 19% by value, according to a new report by the Fintech Association for Consumer Empowerment (FACE) based on data from CRIF High Mark (an RBI-licensed credit bureau).
The data suggests that digital lenders are increasingly becoming the primary channel for small-ticket consumer credit, particularly among younger borrowers and customers outside major metros.
The report shows that while banks continue to dominate personal lending by value with a 61% share, digital shadow banks now account for more than three-fourths of all personal loan accounts originated in the country. Their average ticket size stood at ₹16,238 in FY26, compared with ₹90,547 for other NBFCs and ₹4.9 lakh for banks.
Read more: RBI spent on avg over $1 billion daily in two weeks defending the rupeeGrowth Shifts From Volume To Value
While sanction volume growth for digital NBFCs has slowed sharply from 80% in FY23 to 12% in FY26, sanction value growth accelerated to 39% in FY26 from 19% a year earlier.
The divergence suggests lenders are moving toward larger ticket sizes and more established borrowers rather than pursuing growth solely through customer acquisition.
Average ticket size jumped 24% in FY26 to ₹16,238, reversing a decline seen in the previous year. The share of loans above ₹5 lakh also increased to 10% from 8% a year ago.
In the March quarter of FY26, sanction value surged 57% year-on-year to ₹62,194 crore even as sanction volume growth moderated, highlighting the ongoing shift toward larger-ticket lending.
"On the back of enabling regulatory guidelines, the digital lending sector has phenomenally matured to serve the borrowers across segments and product preferences at scale. The sector is very excited and confident about meeting India's evolving credit needs. Advancements in technology, the digital economy, and the muscle-strength industry have developed over time, will support deepening and diversification in digital lending to serve consumers with highly personalised products. All we need is firm anchoring in responsible lending and consumer-centricity to truly improve consumers' financial health," Sugandh Saxena, CEO of FACE, said.
Outstanding Loan Book Reaches ₹1.43 Lakh Crore
The total outstanding digital personal loan portfolio reached ₹1.43 lakh crore as of March 2026, up from ₹1.11 lakh crore a year earlier. Active loan accounts stood at 5.5 crore.
Digital NBFCs now account for 45% of all active personal loan accounts in the country but only 9% of the total personal loan book by value, gaining share in small-ticket lending.
Read more: This Indian multi-bagger has weathered both Trump tariffs and the war so far Young India Drives Digital Credit Demand
Borrowers below 35 years accounted for 58% of the sanctioned loan value during FY26, reinforcing the role of digital channels as the preferred source of credit for younger consumers. Customers aged 26-35 alone accounted for 45% of total sanctions by value.
Growth was particularly strong among younger and newer-to-credit borrowers. Loan sanctions to borrowers under 25 years grew 102% year-on-year, while sanctions to customers with less than one year of bureau history surged 125%.
At the same time, the customer base is becoming more seasoned. More than 60% of the sanctioned value came from borrowers with a bureau vintage of over 5 years, indicating that digital lenders are increasingly catering to experienced credit users as well.
Beyond Metros
The report highlights the growing penetration of digital lending outside India's largest cities.
Nearly 39% of the sanctioned value came from Tier III cities and beyond, while 37% originated from rural areas. Over the last four years, the share of Tier III and smaller locations has steadily increased from 32% to 39%.
Among states, Telangana posted the highest growth in sanctioned value during FY26 at 50%, followed by Andhra Pradesh at 46% and Uttar Pradesh at 46%.
Women Borrowers Still Underrepresented
Despite gradual improvement, women still account for only 18% of the sanctioned value in the digital personal loan market. However, female participation has risen steadily from 14% in FY23 to 18% in FY26.
The report notes that the gender composition of digital lending is broadly similar to that of banks and traditional NBFCs, indicating wider structural challenges in women's access to formal credit.
Asset Quality Improves
One of the more notable findings is the improvement in portfolio quality.
The share of loans overdue by more than 90 days fell to 1.4% in March 2026 from 3.3% in March 2023, reflecting stronger underwriting and portfolio management practices across the industry.
Delinquency levels were highest among borrowers with one to two years of bureau vintage at 1.9%.
1.8% of younger borrowers, below 25 years, recorded a days past due (DPD) ratio of over 90 days.
Even so, asset quality remained relatively stable across geographies and customer segments.
Read more: Global investors pull out a decade’s worth of India equity inflows
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