Digital NBFC Personal Loan Book May Cross ₹3.6 Lakh Crore by FY30: What It Means for Borrowers

India’s digital lending ecosystem is entering a new phase of rapid expansion. According to a recent industry report, digital non-banking financial companies (NBFCs) are expected to see their personal loan portfolios grow sharply over the next five years. The rise reflects how technology-led lenders are reshaping credit access, especially for young and first-time borrowers who were earlier underserved by traditional banks.

The report estimates that the personal loan book of digital NBFCs could cross ₹3.6 lakh crore by FY30, highlighting the growing importance of fintech-driven lending in India’s financial system.

Rapid Growth Driven by Digital Adoption

Digital NBFC lending has already expanded at a remarkable pace. Outstanding personal loans more than doubled to about ₹1.3 lakh crore by September 2025 from ₹0.6 lakh crore in March 2023, showing how quickly borrowers are shifting towards app-based credit.

The sector is projected to grow at a compound annual growth rate (CAGR) of roughly 26–28% between FY25 and FY30. This growth is being powered by:

• Increasing smartphone and internet penetration
• Faster digital onboarding using e-KYC
• Expansion into new borrower segments, including gig workers and thin-credit customers
• Supportive regulatory oversight for digital lending

Technology allows lenders to approve loans quickly with minimal paperwork, making small-ticket personal loans widely accessible.

Small Loans, High Risk — But High Returns

Digital NBFCs largely focus on unsecured personal loans, typically smaller in size compared to bank loans. Average ticket sizes increased modestly from ₹12,967 in FY23 to about ₹15,177 in the first half of FY26, indicating rising borrower confidence and higher credit demand.

Despite lending to relatively riskier customers, asset quality has improved. Gross non-performing assets (NPAs) declined to around 2.1% by September 2025, down from 3.3% earlier, supported by stricter underwriting practices and periodic write-offs.

Profitability, however, remains moderate. Digital NBFCs typically earn net interest margins of 8–12%, reflecting the “high-risk, high-yield” nature of unsecured lending.

Rising Competition With Banks

Banks still dominate personal loans by value because they cater to prime borrowers with larger ticket sizes. However, their share is gradually declining as fintech-led NBFCs capture volume growth, particularly in smaller loans and new-to-credit customers.

Industry data also shows digital lenders now account for a large share of personal loan volumes, even though their share in total loan value remains smaller, signalling a shift toward mass-market credit distribution.

Conclusion

The expected expansion of digital NBFC personal loan books signals a structural shift in India’s lending landscape. Technology-driven underwriting, wider credit inclusion, and investor funding support are enabling rapid scale-up.

However, the model depends heavily on managing credit risks and regulatory compliance. If asset quality remains stable, digital NBFCs could become one of the strongest drivers of retail credit growth in India by the end of the decade, bringing formal finance to millions of previously underserved borrowers.