Need a personal loan? Report shows digital lenders are outpacing legacy banks; younger borrowers prefer fintech apps
Digital personal loans are becoming a significant part of how Indians access unsecured credit, particularly among younger borrowers and those in smaller cities.
The report titled “Digital Personal Loans” was released by the Fintech Association for Consumer Empowerment (FACE), an RBI-recognised Self-Regulatory Organisation for the FinTech sector (SRO-FT).
It uses data from credit bureau CRIF High Mark and tracks personal loans sanctioned by 110+ digital NBFCs from April 2022 to June 2026. It also compares digital NBFCs with banks and other NBFCs to show their position in India’s overall personal-loan market.
In the first quarter of FY27 (April-June 2026), digital NBFCs sanctioned 3.4 crore personal loans worth ₹64,656 crore, accounting for 70% of all personal-loan sanction volumes across digital NBFCs, other NBFCs and banks. The report groups digital NBFCs as lenders that primarily offer personal loans through digital lending apps.
The data suggests that digital lending is expanding access to smaller-ticket personal loans, while banks continue to dominate higher-value borrowing.
Are digital personal loans becoming more popular?
During Q1 FY26-27, lenders sanctioned about 4.9 crore personal loans worth ₹2.99 lakh crore.
Digital NBFCs sanctioned 3.4 crore loans amounting to ₹64,656 crore, with an average ticket size of ₹18,802, about 15% higher than in FY 25-26. Digital loans accounted for 22% of total sanction value and 70% of total sanction volume. Volumes continue to grow, though at a steadier pace. Sanction volume rose 14% over Q1 FY 25-26 and 2% over the previous quarter.
The average ticket size has increased, but it remains much lower than the ₹70,025 average for other NBFCs and ₹4.52 lakh for banks. This indicates that digital personal loans continue to cater largely to smaller borrowing requirements.
How is the share of digital loans rising?
In FY22, digital NBFCs accounted for 12% of the personal-loan sanction value, which increased to 22% by value in Q1 FY27. This means that digital loans are steadily increasing their share in the personal-loan market.
Over the same period, banks’ share declined from 72% to 52%, while the share of other NBFCs increased from 17% to 26%.
In terms of sanction volume, digital NBFCs’ share increased from 66% in FY22 to 70% in Q1 FY27.
Who is taking these digital loans?
Younger borrowers form a significant part of the digital lending customer base. During Q1 FY26-27, 58% of sanction value went to customers below 35 years of age, 82% to male borrowers, and about 40% to customers in Tier III cities and beyond.
The report also found that around 60% of sanction value came from loans above ₹50,000, borrowers with a bureau vintage (credit history) of 5 years or more, and customers in the mid- to low-risk segments.
Women accounted for 18% of sanction value, suggesting that their participation in formal credit remains relatively limited.
Sugandh Saxena, CEO of FACE, said, “The report underlines the scale and relevance of digital NBFCs in India’s unsecured credit market. Their ability to serve consumers across demographics and use cases is an important contribution to expanding formal credit. Quality growth will sustain by keeping customer interest, transparency and responsible conduct at the centre and engaging with consumers for responsible credit behaviour.”
Disclaimer: This is for informational purposes only. Please consult a qualified expert before making any financial decisions.
