India's Digital Lending Surges, Green Finance Grows

India's financial landscape is undergoing a significant transformation, marked by the substantial growth of digital lending and the increasing adoption of green finance products.

Digital lending has seen exponential expansion, with cumulative disbursals exceeding 11 crore loans, collectively valued at approximately ₹2.9 lakh crore. This growth is facilitated by robust digital infrastructure, including Aadhaar-based eKYC, UPI, and widespread smartphone usage, which effectively reduce operational costs.

Simultaneously, there's a rising consumer interest in green finance options, such as loans for electric vehicles (EVs) and solar installations. This trend is fueled by heightened environmental awareness and the burgeoning renewable energy and electric mobility sectors.

Despite these advancements, consumers face challenges integrating green finance into their budgets, including higher upfront costs and a lack of specialized knowledge. Digital lending, while expanding access, also introduces risks like over-indebtedness, with delinquency rates for small loans reaching 3.6% in early 2026.

Lenders are mitigating these risks by leveraging technology-driven underwriting and alternative data sources. To manage credit risk in green finance, partnerships with OEMs and asset-level data are utilized, ensuring responsible credit extension and accessibility.