Small-Ticket Loans Fuel India's Digital Lending Growth
India's digital lending landscape is experiencing a significant boom, primarily driven by the robust demand for small-ticket personal loans. A recent report by the Fintech Association for Consumer Empowerment (FACE), analyzing data from CRIF High Mark, reveals that the average ticket size for these loans increased by 15% to ₹18,802 in the first quarter of fiscal year 2026-27 (Q1 FY26-27).
Digital Non-Banking Financial Companies (NBFCs) continue to be the primary facilitators of this growth, sanctioning 3.4 crore personal loans worth ₹64,656 crore during the quarter. This accounts for a substantial 70% of the total personal loan sanction volume and 22% of the overall sanction value across the market.
Average Loan Size and Market Composition
Despite the notable increase, the average ticket size for digital personal loans remains considerably lower than those offered by traditional lenders. For other NBFCs, the average sanction size was ₹70,025, and for banks, it stood at ₹4.52 lakh. This disparity underscores the digital lenders' strategic focus on catering to smaller, more accessible credit requirements.
The composition of digital loans further highlights the prominence of smaller tickets. Loans below ₹25,000 constituted 27% of the sanction value in Q1 FY26-27, while those between ₹25,000 and ₹50,000 contributed an additional 12%. However, the market is also gradually evolving, with approximately 60% of the sanction value now coming from loans exceeding ₹50,000, often extended to borrowers with more established credit histories and moderate risk profiles.
Expanding Reach and Improving Portfolio Quality
The report indicates a strong expansion in both the volume and value of digital personal loans. Sanction volume grew by 14% year-on-year (YoY) and 2% quarter-on-quarter (QoQ), while sanction value saw an even more rapid increase of 50% YoY and 4% QoQ. This divergence illustrates the rising average amount being borrowed.
Digital lenders have successfully penetrated new demographic segments. Approximately 58% of the sanction value during the quarter went to borrowers under 35 years of age, and around 40% was directed to customers in Tier III cities and beyond. This demonstrates the effectiveness of digital models in reaching customer segments seeking short-term, small-value loans.
As of June 2026, the outstanding digital personal loan portfolio reached 5.6 crore accounts, valued at ₹1.54 lakh crore, marking a 28% growth in value compared to June 2025.
Crucially, this expansion has been accompanied by a significant improvement in portfolio quality. The 90-plus Days Past Due (DPD) ratio for digital personal loans stood at a healthy 1.4% in June 2026, a substantial reduction from 3.3% recorded in March 2023. This suggests a maturing market with better risk assessment and collection mechanisms in place.