Digital non‑banking finance companies’ personal loan portfolios are expected to exceed Rs. 3.6 lakh crore by FY30, implying a compound annual growth rate of 26–28 per cent during FY25–FY30, a report said on Monday. 

The report from ratings agency CareEdge Ratings said that the strong growth is driven by increasing digital penetration, expanding borrower segments and a supportive regulatory framework.

Outstanding personal loans of digital NBFCs more than doubled to Rs. 1.3 lakh crore as of September 2025 from Rs. 0.6 lakh crore in March 2023, the report cited Fintech Association for Consumer Empowerment (FACE) data. 

Digital NBFCs witnessed a modest uptick in average ticket size from Rs. 12,967 in FY23 to Rs 15,177 in H1FY26.

Gross non‑performing assets fell to 2.1 per cent by September 2025 from 3.3 per cent in FY23 reflecting an improvement in asset quality driven by recoveries, write‑offs and stringent underwriting.

Further, profitability of major digital NBFCs continues to remain range bound, with return on assets (ROA) ranging between 1 per cent to 4 per cent, reflecting the high-risk, high-yield nature of small-ticket, unsecured loan portfolios.

Profitability analysis also showed that digital NBFCs have a net interest margin of 8 per cent-12 per cent.

“This highlights the high-risk, high-yield nature of their small-ticket, unsecured loan portfolios and efficient digital distribution models. Digital NBFCs write off their NPAs periodically, leading to high credit cost. However, digital NBFCs have strong capital adequacy, backed by patient capital from institutional investors,” it noted.

Digital NBFCs remain volume-heavy, serving riskier customer segments but face higher credit costs and regulatory scrutiny, while traditional NBFCs maintain steadier growth through larger-ticket lending and diversified books.

“Asset quality of Digital NBFCs is expected to remain range-bound supported by their growing focus on strengthening credit underwriting policies and write-offs of NPAs periodically,” said Kalpesh Mantri, Assistant Director – CareEdge Research.

Further, aided by continued funding support from institutional and venture investors Digital NBFCs’ capital adequacy is expected to remain strong, Mantri added.

Banks continue to account for the highest share of the personal loan portfolio in terms of value, supported by their focus on prime customers and higher ticket sizes. However, their share has been gradually declining, indicating increasing competitive intensity, the report noted.