India's FinTech lending sector continues to grow at an impressive pace, as non-banking financial companies (NBFCs) operating in the FinTech space sanctioned 10.9 crore personal loans valued at ₹1,06,548 crore (US$ 12.42 billion) during the financial year 2024-25 (FY25). This figure marks a significant milestone in the evolution of digital lending and reflects the increasing dependence of millions of Indians on formal credit facilitated through FinTech platforms.

The data, released by the Fintech Association for Consumer Empowerment (FACE)—a Self-Regulatory Organisation (SRO) recognised by the Reserve Bank of India (RBI)—provides a detailed snapshot of the sector’s performance, showcasing the depth of FinTech's role in India’s credit landscape.

Digital Lenders Dominate Loan Volumes

Even though FinTech NBFCs accounted for only 12% of total personal loan disbursement by value, they made up an astounding 74% of total loan volumes. This distinction underlines the preference for FinTech platforms for small-ticket, high-frequency borrowing, typically ranging between ₹5,000 to ₹50,000.

Such trends reflect the demand for quick and accessible credit, especially among youth, gig workers, and individuals living in underbanked regions. The average loan size during FY25 stood at ₹9,786 (US$ 114.05), showing how micro-credit remains a critical tool for financial empowerment.

Credit to the Youth and Emerging Bharat

One of the most promising insights from the FY25 report is the inclusiveness of digital credit. A remarkable 66% of the total loan value was disbursed to borrowers under the age of 35, underscoring the FinTech sector’s alignment with the aspirations of India's younger generation.

Additionally, 39% of all loans were disbursed in tier III towns and beyond, bringing formal credit access to semi-urban and rural India. These figures validate the role of FinTech NBFCs in bridging the financial gap in regions where traditional banking penetration remains limited.

This trend reflects the broader national agenda of financial inclusion, as FinTechs leverage technology, mobile penetration, and data-driven underwriting to tap into underserved segments.

Modest Growth in Outstanding Portfolio

As of March 2025, the total outstanding loan portfolio of FinTech NBFCs was ₹73,311 crore (US$ 8.54 billion), a 0.7% YoY increase. While this may appear modest, it highlights a balanced approach to growth, focusing on quality lending and risk mitigation.

Despite the focus on smaller loans, the sector also experienced an 11% rise in total sanctioned value and a 22% increase in loan volumes over the previous year, showing steady and sustainable expansion.

Furthermore, a significant 46% of the total loan value came from tickets exceeding ₹50,000 (US$ 582.71), indicating that FinTech NBFCs are not just catering to micro-credit but also increasingly disbursing medium-sized loans for consumption, education, or small business purposes.

Risk Assessment and Borrower Profiles

FinTech lenders have made considerable progress in maturing their underwriting practices. Data shows that:

• 56% of borrowers had a credit history of over five years, implying increased trust in formal borrowing.

• 59% were categorised as mid-to-low risk, reinforcing the view that the sector is lending responsibly and focusing on creditworthy customers.

These figures highlight a shift from high-risk, first-time borrowers to a more stable and experienced borrower base, which is critical for long-term portfolio health.

Women Participation Sees Steady Rise

In a positive sign for gender-based financial inclusion, women accounted for 16% of the total sanctioned loan value in FY25. While still modest, this number marks a steady increase in female participation in digital credit markets.

The FinTech sector, with its app-based onboarding, digital KYC, and flexible offerings, is increasingly becoming accessible to women borrowers—particularly those in tier II and III towns—who may not have easy access to traditional banks.

Enablers of FinTech Credit Growth

The growth of digital lending in FY25 was powered by several key enablers:

• RBI’s regulatory clarity and recognition of Self-Regulatory Organisations (SROs) like FACE

• Strong mobile internet penetration and widespread use of digital payment systems like UPI

• AI-based underwriting models using alternate data points such as mobile usage, utility payments, and social media profiles

• Ease of access via mobile apps, with loan approvals often happening within minutes

• Lower operational costs compared to traditional banks, allowing FinTech NBFCs to serve even small loan demands profitably

Challenges and the Way Forward

Despite the surge in numbers, the FinTech lending industry faces several challenges:

• Over-indebtedness among repeat borrowers

• Regulatory scrutiny to prevent predatory lending practices

• Ensuring data privacy and security

• Building stronger grievance redressal systems

To address these, industry bodies like FACE are working closely with the RBI to build transparent frameworks, promote ethical lending practices, and strengthen borrower education.

Future of FinTech Credit in India

The FY25 numbers signal a maturing FinTech lending ecosystem that’s no longer just a disbursement engine, but also a platform for responsible, inclusive, and scalable credit. Looking ahead, FinTech NBFCs are expected to:

• Deepen penetration in rural markets

• Expand offerings into secured lending, education finance, and insurance-linked credit

• Leverage open banking frameworks and Account Aggregators to offer personalised credit solutions

• Collaborate with mainstream banks and NBFCs for co-lending arrangements

• Adopt blockchain and real-time analytics to enhance fraud detection and credit scoring

With over 11 crore loans disbursed in a single year, FinTech NBFCs are becoming a vital pillar in India’s financial empowerment journey. Their ability to reach young, underserved, and risk-graded borrowers with speed, efficiency, and customization is setting new benchmarks in the country’s credit infrastructure.

Conclusion

The ₹1.06 lakh crore worth of loans disbursed across 11 crore accounts in FY25 by FinTech NBFCs showcases their transformational impact on India’s personal credit ecosystem. These digital-first lenders have proven their capability in expanding access to formal credit, especially in tier III towns, among the youth, and for mid-to-low risk borrowers.

While their share by value remains modest at 12%, commanding 74% of loan volumes clearly signifies their dominance in high-frequency, small-ticket lending—a crucial element in meeting daily financial needs of millions.

As India continues to embrace digital finance, the role of FinTech NBFCs will only expand, contributing significantly to financial inclusion, economic resilience, and consumer empowerment. Their performance in FY25 is not just a testament to their growth but also a sign of the changing face of credit delivery in India.

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