Fintech-driven personal loans show rising stress, delinquencies at 6-quarter high
Fintech Association
for Consumer Empowerment (FACE), the
Reserve Bank of India
(RBI)-recognised self-regulatory organisation in the fintech sector, shows that personal loans overdue by more than 90 days rose to 3.6% at the end of March 2025—the highest level in the last six quarters.
The biggest pressure is coming from loans disbursed in Tier-3 cities and beyond, which contributed 4.2% to the delinquency rate, followed by rural areas at 4.1% and semi-urban regions at 3.8%. In terms of borrower age, those under 25 accounted for 6.1% of delinquent loans, while the 26–35 age group contributed 3.6%.
Out of the total
personal loan market
of Rs 8.80 lakh crore, fintech NBFCs held a 74% share by volume—amounting to 10.9 crore loans—and a 12% share by value at Rs 1.06 lakh crore as of March 2025.
'Fintech lenders are clearly becoming the preferred choice for borrowers across age groups, risk profiles, and geographies,' said Sugandh Saxena, CEO of FACE. 'With customised, digital-first offerings and a solid regulatory foundation guided by the RBI's
Digital Lending framework
and our self-regulatory efforts, the sector is well-positioned to offer responsible credit at scale. Particularly encouraging is the growing uptake among young borrowers and consumers from Tier-III towns and beyond, signalling the potential for a more inclusive and resilient financial ecosystem.'
The average ticket size of these loans stood at Rs 9,786. Growth in both sanction volume and value slowed compared to the previous years. As of March 2025, fintech loan outstanding stood at Rs 73,311 crore across 4.59 crore loans.
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FACE data showed that sanction volume grew by 22% in FY25, compared to 33% in FY24 and 73% in FY23. Sanction value grew by 11% in FY25, slowing from 36% in FY24 and 66% in FY23.
The report also highlighted that 66% of the total sanctioned value went to borrowers under the age of 35, reflecting a strong preference for digital credit among younger consumers. Additionally, 39% of sanctioned loans were directed to borrowers in Tier-III towns and beyond—a share that continues to increase steadily.
While the average loan size was Rs 9,786, nearly 46% of the total loan value came from tickets above Rs 50,000, indicating the flexibility fintechs offer in catering to varied borrower needs. Notably, 56% of loans went to borrowers with a credit bureau history of five years or more.
About 59% of loans were disbursed to customers with mid-to-low risk profiles, suggesting more mature underwriting practices and prudent portfolio management. Women accounted for 16% of the total sanctioned value—a modest but encouraging sign of growing female borrower participation.
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