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Forecast Period
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2026-2030
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Market Size (2024)
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USD 601.62 Billion
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CAGR (2025-2030)
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11.13%
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Fastest Growing Segment
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Non-Banking Financial Company (NBFC)
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Largest Market
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North
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Market Size (2030)
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USD 1129.25 Billion
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Market Overview
The India
Personal Loan Market was valued at USD 601.62 Billion in 2024 and is expected
to reach USD 1129.25 Billion by 2030 with a CAGR of 11.13% during the forecast
period. The personal loan market in India has experienced significant growth and
development over the years, making it one of the most dynamic and competitive
financial sectors in the country. With a large population and a growing middle
class, the demand for personal loans has surged, driven by various factors such
as increasing aspirations and the need for immediate access to funds.
Furthermore, the personal loan market in India has
witnessed intense competition among banks and non-banking financial companies
(NBFCs). This competition has led to innovative loan products, attractive
interest rates, and flexible repayment options, offering borrowers a wide range
of choices. Additionally, lenders have started customizing loan offers based on
credit profiles, income levels, and specific needs of borrowers, further
enhancing the accessibility and affordability of personal loans. The increasing
demand for personal loans in India can be attributed to various factors such as
rising medical expenses, education costs, travel aspirations, home renovations,
and debt consolidation needs. Personal loans are also used for meeting wedding expenses,
purchasing consumer durables, and funding small business ventures.
Fintech lending startups now hold a 76% market share
in the number of personal loans issued, according to the Fintech Association
for Consumer Empowerment. In the first half of the current financial year, the
industry disbursed 530 million loans worth ₹48,969 crore. Despite the high
volume, fintech lenders account for only 12% of the total disbursed value due
to their smaller average loan size of around ₹10,000. Banks lead the market in
terms of loan value with a 61% share, followed by traditional NBFCs at 27%.
Key Market Drivers
Increasing Financial Inclusion and
Digital Penetration
The rise in financial inclusion and the expansion of
digital financial services have significantly contributed to the growth of the
personal loan market in India. The government and financial institutions have
made considerable efforts to bring banking and financial services to
underserved and unbanked populations. Initiatives such as the Pradhan Mantri
Jan Dhan Yojana (PMJDY) and the expansion of digital payment infrastructure
have increased access to credit and financial products. The widespread adoption
of smartphones and internet connectivity has further accelerated this trend by
making it easier for individuals to apply for and receive personal loans
through mobile apps and online platforms. Digital lending platforms have
simplified the loan approval process, reducing the need for physical
documentation and offering faster disbursement times. Additionally, the rise of
fintech companies and non-banking financial companies (NBFCs) has expanded
access to credit, even for individuals with limited or no credit history. The
integration of artificial intelligence (AI) and machine learning (ML) in credit
assessment has also made it easier to evaluate an applicant’s creditworthiness,
leading to a higher approval rate for personal loans.
Rising Disposable Income and Changing Consumer
Behavior
The steady increase in disposable income and the
evolving spending habits of Indian consumers have driven the demand for
personal loans. As incomes rise, individuals are becoming more comfortable with
leveraging credit to meet lifestyle and personal needs, such as travel, home
improvement, weddings, and consumer electronics purchases. The availability of
flexible repayment options, competitive interest rates, and customized loan
products has encouraged more people to opt for personal loans. Additionally, the
growing aspiration for a better lifestyle, coupled with the desire for
convenience and instant gratification, has increased the willingness of
individuals to take on debt for short-term needs. The rise of the middle class
and the growing number of young professionals with stable incomes have also
contributed to this trend. Financial institutions have responded by offering
tailored personal loan products that cater to specific consumer segments, such
as millennials and self-employed individuals. The introduction of pre-approved
loans and instant loan approvals through digital channels has further
streamlined the process, making personal loans more accessible and appealing.
Improved Credit Infrastructure and Regulatory Support
The strengthening of India’s credit infrastructure and
supportive regulatory environment have played a crucial role in the growth of
the personal loan market. The establishment of credit bureaus such as CIBIL,
Equifax, and Experian has improved the ability of lenders to assess the
creditworthiness of borrowers accurately. This has reduced the risk of defaults
and increased the confidence of financial institutions to offer personal loans
to a wider audience. The availability of credit scores and detailed credit
histories has allowed lenders to offer more personalized loan products based on
an individual's credit profile. Regulatory reforms introduced by the Reserve
Bank of India (RBI) have also supported the expansion of the personal loan
market. Measures such as guidelines on fair lending practices, interest rate
transparency, and loan recovery methods have enhanced customer trust and
encouraged responsible lending. The rise of peer-to-peer (P2P) lending
platforms, enabled by regulatory approvals, has created additional channels for
accessing personal loans. Furthermore, the push toward cashless transactions
and the adoption of the Unified Payments Interface (UPI) have facilitated
seamless loan disbursements and repayments, contributing to the overall growth
of the personal loan segment in India.
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Key Market Challenges
High Default Rates and Credit Risk
One of the major challenges facing the India
Personal Loan Market is the high rate of loan defaults and the associated
credit risk. Personal loans are typically unsecured, meaning they are not
backed by any collateral. This makes them inherently riskier for lenders.
Borrowers who face financial difficulties, such as job loss, medical
emergencies, or business failures, may struggle to repay their loans, leading
to higher non-performing assets (NPAs). Additionally, some borrowers may
overestimate their repayment capacity, resulting in missed payments and
defaults. The increasing reliance on digital lending platforms, which often
approve loans based on limited credit data and alternate scoring models, has
further amplified this risk. Fintech companies and non-banking financial
companies (NBFCs) that cater to underserved segments, including those with low
or no credit history, face higher exposure to defaults. This challenge has
forced financial institutions to tighten their lending criteria, conduct more
thorough background checks, and implement advanced credit assessment tools to
minimize risk.
Regulatory and Compliance Issues
The India Personal Loan Market is
heavily influenced by evolving regulations and compliance requirements, which
pose significant challenges for lenders. The Reserve Bank of India (RBI) has
introduced various guidelines to protect consumer interests, ensure fair
lending practices, and maintain market stability. However, adapting to these
regulatory changes requires significant effort and resources from lenders. For
instance, the RBI’s guidelines on loan recovery, data privacy, and interest
rate disclosures have compelled financial institutions to revise their lending
strategies and operational processes. Digital lending platforms, in particular,
face increased scrutiny over data privacy and customer protection. The RBI’s
framework for digital lending introduced in 2022 mandates that loan agreements,
terms, and conditions be communicated transparently to borrowers, which has
increased compliance costs for lenders. Moreover, the rise of fraudulent
activities and predatory lending practices by unregulated entities has prompted
stricter oversight, adding to the regulatory burden on legitimate lenders.
Key Market Trends
Growth of Digital Lending Platforms
The rise of digital lending platforms is
one of the most significant trends shaping the India Personal Loan Market. The
increasing penetration of smartphones and internet access has enabled the
growth of app-based and online lending services, making it easier for consumers
to apply for and receive personal loans. Fintech companies have capitalized on
this trend by offering quick loan approvals, minimal documentation, and
seamless user experiences. The use of artificial intelligence (AI) and machine
learning (ML) for credit assessment has allowed lenders to evaluate borrowers’
creditworthiness more accurately, even for individuals with limited credit
history. Digital Know Your Customer (e-KYC) processes and the integration of
the Unified Payments Interface (UPI) have further streamlined the loan
disbursement and repayment processes. Moreover, many digital lenders provide
personalized loan products based on real-time data analysis of borrowers’
financial behavior and repayment capacity. The convenience and speed of digital
lending have attracted a growing number of young professionals and
self-employed individuals who seek quick access to funds for personal and
lifestyle needs.
Increasing Demand for Small-Ticket
Personal Loans
The demand for small-ticket personal
loans has seen a sharp increase, driven by the changing financial needs and
spending habits of Indian consumers. Small-ticket loans, typically ranging from
a few thousand to a few lakh rupees, are used for short-term expenses such as
medical emergencies, home repairs, travel, and lifestyle purchases. The growth
of Buy Now, Pay Later (BNPL) schemes and micro-lending platforms has fueled
this trend, as consumers seek flexible repayment options and instant credit
access. The rise of gig economy workers, freelancers, and self-employed
professionals has also contributed to the growing demand for small-ticket
loans, as they often require quick cash flow solutions to manage their
irregular income patterns. Digital lenders have capitalized on this trend by
offering pre-approved loans and instant disbursals through mobile apps and
online platforms. The simplified loan application process, minimal
documentation requirements, and quick turnaround time have made small-ticket
loans more appealing to young and urban consumers.
Segmental Insights
Provider Insights
In the India Personal Loan Market, banks have emerged
as the dominant segment due to their established credibility, wide customer
base, and strong financial infrastructure. Banks offer personal loans at
competitive interest rates, supported by their access to low-cost funds and
large deposit bases. The trust and reliability associated with traditional
banks make them the preferred choice for consumers seeking personal loans.
Banks also have the advantage of an extensive branch network, which allows them
to reach customers across urban and rural areas, facilitating better customer
service and loan disbursement. One of the key factors contributing to the
dominance of banks in the personal loan market is the availability of
pre-approved loans for existing customers. Many banks use customer transaction
history, credit scores, and income patterns to offer instant personal loans
with minimal documentation. The integration of advanced digital platforms and
mobile banking apps has further enhanced the loan application and disbursement
process, making it faster and more convenient for customers. Moreover, banks
have adopted data-driven credit assessment models, enabling them to reduce
default risks and improve loan approval rates. The growing financial literacy
and awareness about personal loan products have also strengthened the position
of banks.
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Regional Insights
The North region has emerged as the dominant segment
in the India Personal Loan Market due to its high population density,
increasing urbanization, and rising disposable incomes. Major cities such as
Delhi, Chandigarh, and Jaipur have witnessed a significant increase in demand
for personal loans, driven by the growing financial needs of both salaried and
self-employed individuals. The presence of a strong banking network and a
growing number of non-banking financial companies (NBFCs) in the region has
made personal loan products more accessible to consumers. Moreover, the
expansion of digital lending platforms and mobile banking services has further
simplified the loan application and disbursement process, contributing to the
growth of the market in this region. The increasing awareness about personal
loan options and improved financial literacy among consumers in the North
region have also played a crucial role in driving market growth. Borrowers are
more inclined to seek personal loans for various purposes, including home
renovation, education, medical expenses, and lifestyle upgrades.
Recent Developments
- In 2025, Poonawalla
Fincorp has launched PL Prime Digital 24x7, a fully digital personal loan
designed for salaried professionals. It offers instant approvals for loans up
to ₹15 lakh without requiring collateral or paperwork. The loan can be accessed
anytime through the company's app, website, or authorised partners. It features
flexible EMI tenures, providing quick financial support for both planned and
unexpected expenses.
- In 2025, South Indian Bank has launched SIB QUICKPL, a fully
digital personal loan platform for new customers. It allows salaried and
self-employed individuals with strong credit profiles to obtain unsecured
personal loans within 10 minutes through a paperless process.
- In 2025, Bajaj
Finance has launched much-anticipated Loan Fest offering gold loans up to ₹2
crore at competitive interest rates. The initiative provides quick approvals,
flexible repayment options, and low processing fees. Customers can apply
through the Bajaj Finance app or website. The scheme aims to meet short-term
financial needs with minimal documentation.
Key Market Players
- IDFC FIRST Bank Limited
- HDFC Bank Limited
- ICICI Bank Limited
- Axis Bank Limited
- Kotak Mahindra Bank Limited
- Navi Technologies Limited
- Lendingkart Finance Limited
- Whizdm Innovations Private Limited
(Moneyview)
- One97 Communications Limited (Paytm)
- Bajaj Finserv Ltd
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By Provider
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By Tenure
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By Interest Rate
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By Region
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- Bank
- Non-Banking Financial Company (NBFC)
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- Less than 12 Months
- 12-36 Months
- More Than 36 Months
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Report Scope:
In this report, the India Personal Loan Market has
been segmented into the following categories, in addition to the industry
trends which have also been detailed below:
- India Personal Loan Market, By
Provider:
o Bank
o Non-Banking Financial Company (NBFC)
- India Personal Loan Market, By
Tenure:
o Less than 12 Months
o 12-36 Months
o More Than 36 Months
- India Personal Loan Market, By
Interest Rate:
o 10%-15%
o 16%-20%
o Above 20%
- India Personal Loan Market,
By Region:
o North
o South
o East
o West
Competitive Landscape
Company Profiles: Detailed analysis of the major companies presents
in the India Personal Loan Market.
Available Customizations:
India Personal Loan Market report with the given
market data, Tech Sci Research offers customizations according to a company's
specific needs. The following customization options are available for the
report:
Company Information
- Detailed analysis and
profiling of additional market players (up to five).
India Personal Loan Market
is an upcoming report to be released soon. If you wish an early delivery of
this report or want to confirm the date of release, please contact us at sales@techsciresearch.com