Synopsis

Digital lenders in India experienced a notable 28% increase in their personal-loan portfolios over the past year. The number of outstanding loan accounts slightly decreased to 5.64 crore, indicating a shift towards larger balances. New loan sanctions also surged by 50%, highlighting a strong demand for personal loans. Borrowers with limited credit histories and younger customers contributed significantly to this growth.

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Digital lenders’ personal-loan books expanded sharply in the year to June even as the number of outstanding loan accounts edged lower, pointing to larger balances as the driver of growth.

The outstanding portfolio of digital-first NBFCs rose 28% to Rs 1,54,195 crore at the end of June 2026 from Rs 1,20,122 crore a year earlier, according to a report by the Fintech Association for Consumer Empowerment (FACE). The number of outstanding accounts, however, slipped to 5.64 crore from 5.69 crore—a decline of about five lakh.

ET Bureau

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The average outstanding balance per account consequently rose nearly 30% to about Rs 27,350 from roughly Rs 21,100, calculations based on the report’s figures show. Account numbers recovered from 5.50 crore in March but remained below the level recorded a year earlier.

New loan sanctions show a similar divergence. Digital NBFCs sanctioned personal loans worth ₹64,656 crore in the June quarter, up 50% year on year, while the number of loans sanctioned rose 14% to 3.44 crore. The average sanctioned loan stood at Rs 18,802, compared with Rs 16,282 for the whole of FY26. Loans above Rs 50,000 accounted for about 60% of sanction value.

The larger book has coincided with an improvement in the report’s delinquency measure. The share of loans 90 to 180 days overdue declined to 1.4% in June from 2.5% a year earlier.

Growth was particularly strong among borrowers with limited credit histories. The value of loans sanctioned to customers with less than a year of credit-bureau history jumped 178% year on year in Q1FY27, compared with 50% growth in overall digital loan sanctions. They accounted for 7% of sanction value, while borrowers with more than five years of credit history made up 61%.

Younger customers remained central to digital lending. Sanction value for borrowers below 25 more than doubled from a year earlier, rising 104%. Customers under 35 received 58% of the amount sanctioned by digital NBFCs during the quarter, compared with 37% for banks. About 40% of digital lenders’ sanction value went to borrowers in Tier III cities and beyond.

The credit profiles of digital lenders’ customers also differed from those of banks. Borrowers in the report’s high and very-high-risk score bands accounted for 29% of digital NBFCs’ sanction value, against 9% for banks. Those in the low and very-low-risk bands accounted for 36% at digital NBFCs, compared with 70% at banks.

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