Digital NBFCs Projected to Oversee ₹3.6 Trillion Personal Loan Market by FY30
New Delhi, March 30 – Digital non-banking finance companies (NBFCs) are poised to dominate the personal loan market, with projections indicating a portfolio exceeding ₹3.6 lakh crore by fiscal year 2030, according to a report released on Monday. The forecast anticipates a compound annual growth rate of 26-28 per cent between fiscal years 2025 and 2030.The report, issued by ratings agency CareEdge Ratings, attributes this robust growth to factors including increasing digital penetration, a broadening base of borrowers, and a supportive regulatory environment.
Outstanding personal loans for digital NBFCs more than doubled between March 2023 and September 2025, rising from ₹0.6 lakh crore to ₹1.3 lakh crore, according to data from the Fintech Association for Consumer Empowerment (FACE). The average loan size saw a modest increase during this period, moving from ₹12,967 in fiscal year 2023 to ₹15,177 in the first half of fiscal year 2026.
Improvements in asset quality have also been observed, with gross non-performing assets declining to 2.1 per cent as of September 2025, compared to 3.3 per cent in fiscal year 2023. This improvement is attributed to recoveries, write-offs, and enhanced underwriting standards.
Profitability analysis revealed that major digital NBFCs maintain a return on assets (ROA) range of 1 per cent to 4 per cent, reflecting the nature of their small-ticket, unsecured loan portfolios. The report noted a net interest margin of 8 per cent to 12 per cent. Digital NBFCs periodically write off their non-performing assets, contributing to higher credit costs. However, the sector maintains strong capital adequacy, supported by investment from institutional and venture capital.
Despite serving riskier customer segments and facing greater regulatory scrutiny, digital NBFCs remain volume-heavy. Traditional NBFCs, on the other hand, exhibit steadier growth through larger-ticket lending and more diversified loan books. The asset quality of digital NBFCs is expected to remain stable, supported by a focus on strengthening credit underwriting and periodic NPA write-offs.
Banks continue to hold the largest share of the personal loan market in terms of value, driven by their focus on prime customers and larger loan sizes. However, this share has been gradually declining, indicating increased competition within the sector.
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