State of Digital Lending 2026
A comprehensive guide to trends, insights, and best practices across India's eight digital credit categories — with FY19–FY25 actuals, FY26–FY30 outlook, and senior practitioner perspectives.
State of Digital Lending 2026
A comprehensive guide to trends, insights, and best practices across India's eight digital credit categories — with FY19–FY25 actuals, FY26–FY30 outlook, and senior practitioner perspectives.
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credit categories analysed across FY19–FY25, with an FY26–FY30 outlook validated by senior risk and lending leaders.
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Why this report matters now
What 2025 told us about lending in 2026
Headlines hide the bifurcation
Top-line delinquency rates look broadly contained, but deeper buckets are expanding. The same borrowers are migrating into chronic arrears rather than fresh defaults emerging.
Regulation is operational
RBI's Digital Lending Directions are now in force and the co-lending framework has been clarified. Players who built compliance infrastructure are now structurally advantaged.
Distribution is moving to UPI
Credit-on-UPI saw a 70 bps jump in 2025 and split-bill crossed 9 million users. Credit at the point of transaction is no longer theoretical — it is happening at scale.
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Findings from the data
Three things the headline numbers don't show
Old delinquency, not new
91–360 day card overdue balances jumped 44% YoY and SBI Cards' write-offs rose 32%. The risk story isn't fresh defaults — it's the same borrowers sliding deeper into arrears.
89.3% of personal loan volume is under ₹1 lakh
Sub-₹1 lakh personal loans now account for 89.3% of FY25 origination volume, almost entirely through NBFCs on digital channels. Banks have stepped back from this segment.
BNPL is splitting by use case
Medical emergencies drove 28% of BNPL borrowing during peak periods of 2025. Healthcare and education BNPL now show lower delinquency than discretionary categories — and lenders are pricing accordingly.
Featured perspectives
Four senior practitioners contributed industry spotlights
Each spotlight captures how a specific corner of the market actually operates today — drawn from semi-structured interviews with senior risk and lending leaders.
CXOs must mandate real-time APIs in product builds for 80% of decisions to optimise return-risk at scale.
From a lender's perspective, the constriction is not battery warranty or price parity — it is the challenge of risk predictability.
Risk builds when customers have access to more credit than their repayment capacity can support.
The future is embedded finance — where tightly integrated ecosystems let customers and merchants build a transaction history on an anchor platform.
Eight categories, one direction
Where each segment is heading in 2026
Headline metrics for the eight credit categories the report analyses, colour-coded by structural trajectory: stable, mixed (growth with concentrating risk), or under stress.
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What's inside
What this report covers
India's digital lending market has moved out of its experimentation phase. Loan books keep growing, but deeper delinquency buckets are widening even as headline rates stay contained, channels are bifurcating, and infrastructure is becoming as important as capital. This 21-chapter, 180-page report maps eight credit categories across FY19–FY25, with an FY26–FY30 outlook and industry spotlights from four senior risk and lending leaders.
Eight-category breakdownHousing, LAP, secured business, two-wheeler, personal loans, credit cards, BNPL, and EDI — each with growth dynamics, sachetisation trends, asset quality, market structure, and the top-10 by portfolio size.
Where risk is concentrating91–360 day card overdue balances jumped 44% YoY; SBI Cards write-offs rose 32% YoY; micro-LAP under ₹25L is at 3–3.5% delinquency while seasoned pools stay below 1%.
The geographic pivot55% of new digital finance users in late 2024 came from Tier 2/3 cities, and rural two-wheeler sales (8.39%) outpaced urban (6.77%) — reshaping where FY26 originations will come from.
Credit-on-UPI as distribution504 million UPI users, 20 billion monthly transactions, 9 million split-bill users — and how credit-on-UPI is moving distribution from standalone apps to the point of transaction.
FY26–FY30 outlook, product by productForecasts for each of the eight segments plus a 'what it means for lending' decision frame, anchoring origination, risk, and operating-model choices for the next cycle.
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