Digital Personal Loans Surge 53%, Outstanding Crosses ₹1.39 Lakh Crore: FACE Report

Moneylife Digital Team 25 March 2026

Personal Finance

India’s personal loan market is witnessing a sharp surge driven by digital lending platforms, with digital personal loans recording strong growth in both value and volume, according to a report by the Fintech Association for Consumer Empowerment (FACE).

The report shows that digital personal loans grew by about 53% year-on-year (y-o-y) in sanctioned value in the third quarter (Q3) of FY25-26, even as overall loan outstanding rose to ₹1.39 lakh crore by December 2025, an increase of about 53% from March 2024. FACE sourced the report data from CRIF High Mark, a credit bureau.

"It is worth noting that consumers take personal loans for multiple reasons, including to manage cash flows, tap opportunities and deal with unexpected events. Access to convenient and timely digital credit is a crucial component of a financial toolkit for managing finances and building resilience," the report says.

Digital Loans Dominate Volume Growth

Despite accounting for only 19% of the total personal loan sanction value, digital lenders now contribute a dominant 78% of the total loan volume, highlighting their role in expanding access to credit, the report shows.

During the first three quarters of FY25-26, about 126mn (million) personal loans worth ₹8.24 lakh crore were sanctioned across the system. Of this, digital non-banking finance companies (NBFCs) alone accounted for about 99mn loans worth ₹1.53 lakh crore. Digital NBFCs primarily offer digital personal loans through their own or in-house digital lending apps (DLAs) or in partnership with DLAs of lending service-providers (LSPs).

The average ticket size for digital loans stood at ₹15,493, significantly lower than for bank and traditional NBFC loans, reflecting the segment’s focus on small-value, short-term credit.

Young Borrowers Drive Demand

According to FACE, the surge in personal loans is being led by younger consumers, with more than 60% of the sanctioned value going to borrowers under 35.

The report also found that about 40% of borrowers have a credit history of less than five years, indicating that digital lenders are increasingly catering to first-time or relatively new credit users.

Expansion beyond Metros

Digital lending is also penetrating deeper into smaller cities, with about 39% of loans going to consumers in Tier III locations and beyond, the report shows.

Rural participation is also gradually rising, although urban borrowers continue to dominate overall volumes. The data suggests that digital platforms are playing a key role in bridging credit access gaps in underserved markets.

Shift towards Higher Ticket Loans

While small-ticket loans continue to dominate, there is a gradual shift towards higher-value borrowing. More than half, or around 56%, of the sanctioned value now comes from loans above ₹50,000, indicating increasing borrower confidence and deeper credit penetration.

The average ticket size has also risen by about 18% compared to that in the previous financial year, signalling a maturing market.

Improving Portfolio Quality

Despite rapid expansion, FACE says, the asset quality in the digital lending segment is showing signs of improvement. The proportion of loans overdue by more than 90 days (days past due-DPD 90+) declined to 1.9% as of December 2025, reflecting better underwriting and risk management practices.

Financial Inclusion vs Risk Concerns

The report highlights that digital personal loans are increasingly becoming a key financial tool for managing cash flows, meeting emergencies, and accessing short-term credit.

However, the rapid growth in unsecured personal lending, particularly among younger and relatively new borrowers, may also warrant closer regulatory scrutiny, going forward.

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