Digital Loans Surge 25% Amidst RBI Oversight

Digital lenders experienced substantial growth in the first half of fiscal year 2025-2026, disbursing personal loans totaling Rs 97,381 crore. This figure represents a robust 25% year-on-year increase, indicating a strong recovery and expansion in the digital lending market. These lenders issued 6.4 crore loans, making up 80% of all personal loans disbursed nationally, though their value constituted only 19% of the market, highlighting a focus on small-ticket, short-tenure credit.

The market's momentum accelerated with a 26% sequential growth over the previous half-year, reversing a prior contraction. The average digital loan amount also saw a healthy rise of approximately 14% year-on-year, reaching Rs 15,177. Notably, younger demographics and underserved areas are benefiting greatly, with borrowers under 35 securing 60% of the sanctioned value and tier-III towns and rural areas contributing significantly to loan disbursements.

Furthermore, the quality of digital lending portfolios has shown improvement, with delinquencies exceeding 90 days decreasing to 2.1% as of September 2025. This positive trend in asset quality emerges amidst increased regulatory scrutiny from the Reserve Bank of India aimed at curbing fraud and delinquencies. The digital lending sector continues to play a crucial role in meeting short-term credit demands, particularly for first-time and younger borrowers.