Digital non-banking finance companies are anticipated to see their personal loan portfolios exceed Rs. 3.6 lakh crore by FY30, with a projected compound annual growth rate of 26–28% during FY25–FY30, as per a report by CareEdge Ratings. This growth is attributed to the rising digital penetration, expansion of borrower segments, and a supportive regulatory environment.
The report highlighted that outstanding personal loans of digital NBFCs more than doubled to Rs. 1.3 lakh crore by September 2025 from Rs. 0.6 lakh crore in March 2023, based on data from the Fintech Association for Consumer Empowerment (FACE). Moreover, digital NBFCs observed a slight increase in the average ticket size from Rs. 12,967 in FY23 to Rs. 15,177 in H1FY26.
By September 2025, the gross non-performing assets of digital NBFCs decreased to 2.1% from 3.3% in FY23, indicating an enhancement in asset quality driven by recoveries, write-offs, and stringent underwriting practices. Additionally, major digital NBFCs have maintained a profitability range with return on assets (ROA) varying between 1% to 4%, reflecting the high-risk, high-yield nature of their small-ticket, unsecured loan portfolios.
The profitability analysis further revealed that digital NBFCs typically possess a net interest margin of 8% to 12%. These companies emphasize the high-risk, high-yield aspect of their small-ticket, unsecured loan portfolios and efficient digital distribution models. Despite periodic write-offs of NPAs, digital NBFCs exhibit robust capital adequacy supported by patient capital from institutional investors.
Digital NBFCs primarily cater to volume-heavy operations, serving riskier customer segments but encountering elevated credit costs and regulatory scrutiny. In contrast, traditional NBFCs sustain more stable growth through larger-ticket lending and diversified portfolios. Kalpesh Mantri, Assistant Director at CareEdge Research, noted that the asset quality of digital NBFCs is anticipated to remain steady, underpinned by their efforts to fortify credit underwriting policies and periodic NPA write-offs.
Moreover, with continued funding backing from institutional and venture investors, digital NBFCs are expected to maintain strong capital adequacy. Although banks retain the largest share in the personal loan portfolio in terms of value, their dominance has been gradually diminishing, signaling escalating competitive pressures, according to the report.
