Specialized NBFCs are projected to grow their personal loan assets to Rs 2 lakh crore this fiscal year, up from Rs 1.3 lakh crore. While digital adoption and better credit filtering have improved asset quality, investors should monitor rising funding costs and evolving regulatory views on specific loan products.
Specialized non-banking financial companies (NBFCs) are set for a period of rapid expansion in the personal loan segment. Projections indicate that the total assets under management (AUM) for these entities could reach Rs 2 lakh crore in the current fiscal year, rising significantly from Rs 1.3 lakh crore recorded in the previous year. This growth is largely driven by a combination of digital lending platforms and a strategic pivot in how these companies evaluate potential borrowers.
Market data shows that industry-wide digital NBFC personal loan portfolios had already reached Rs 1.54 lakh crore by June 2026, marking a 28 percent year-on-year increase. Key industry players, such as KrazyBee Services, Navi Finserv, and Moneyview Limited, are currently at the forefront of this digital-led expansion. These companies are increasingly leveraging automated underwriting models to process loan applications faster while maintaining control over their risk profiles.
A critical part of this growth story is the change in how lenders select customers. Rather than focusing on high-risk, new-to-credit segments, many specialized NBFCs have adjusted their criteria to prioritize salaried and near-prime borrowers. This shift toward higher-ticket loans has contributed to improved asset quality metrics. For the fiscal year ending March 31, 2026, the 90+ days past due (DPD) ratio—a measure of loan defaults—improved to 6.6 percent, down from 8.5 percent in the prior year.
Despite these positive indicators, the sector faces several structural risks. One of the primary challenges is the rising cost of funds, as potential interest rate changes by the central bank could squeeze net interest margins. Additionally, the regulatory environment remains a key factor to watch. The Reserve Bank of India is evaluating new frameworks, particularly regarding revolving credit products, which could force changes in how some personal loan offerings are structured.
Investors tracking this sector may also consider the potential for delayed realization of credit costs. While current asset quality metrics look better, maintaining these levels while aggressively scaling portfolios requires consistent execution. Macroeconomic factors, including geopolitical conditions and monsoon trends, can also influence borrower repayment capacity in the broader retail segment. The next important steps for the industry will be the evolution of regulatory policies regarding product structures and the companies' ability to manage their cost of borrowing in a shifting interest rate environment.