New Delhi, March 30 (NationPress) The personal loan portfolios of digital non-banking finance companies (NBFCs) are projected to surpass Rs. 3.6 lakh crore by FY30, reflecting a compound annual growth rate of 26–28 percent during the period from FY25 to FY30, according to a report released on Monday.

The report from CareEdge Ratings attributes this robust growth to factors such as increasing digital penetration, a broader borrower base, and a favorable regulatory environment.

As of September 2025, the outstanding personal loans of digital NBFCs have more than doubled to Rs. 1.3 lakh crore, up from Rs. 0.6 lakh crore in March 2023, based on data from the Fintech Association for Consumer Empowerment (FACE).

There has also been a slight increase in the average ticket size, rising from Rs. 12,967 in FY23 to Rs. 15,177 in H1FY26.

Moreover, the gross non-performing assets (NPAs) have decreased to 2.1 percent by September 2025, down from 3.3 percent in FY23, indicating an improvement in asset quality due to effective recoveries, prudent write-offs, and rigorous underwriting standards.

The profitability of major digital NBFCs remains relatively stable, with a return on assets (ROA) fluctuating between 1 percent and 4 percent, which reflects the high-risk, high-yield characteristics of their small-ticket, unsecured loan portfolios.

Profitability metrics reveal that these digital NBFCs maintain a net interest margin ranging from 8 percent to 12 percent.

“This underscores the high-risk, high-yield dynamics of their small-ticket, unsecured loan portfolios, as well as their efficient digital distribution networks. Digital NBFCs periodically write off their NPAs, resulting in elevated credit costs. However, they boast strong capital adequacy, supported by patient capital from institutional investors,” the report elaborated.

Digital NBFCs are characterized by a volume-heavy approach, serving higher-risk customer segments, which subjects them to increased credit costs and regulatory oversight, in contrast to traditional NBFCs that experience more stable growth through larger-ticket lending and diversified asset portfolios.

“The asset quality of digital NBFCs is expected to remain stable, bolstered by their ongoing efforts to enhance credit underwriting policies and periodic write-offs of NPAs,” stated Kalpesh Mantri, Assistant Director at CareEdge Research.

Additionally, with continuous funding from institutional and venture capital investors, the capital adequacy of digital NBFCs is projected to remain robust, Mantri added.

Banks still dominate the personal loan market in terms of portfolio value, focusing on prime clientele and larger ticket sizes. However, their market share has been gradually decreasing, signaling heightened competitive pressures, according to the report.