India Personal Loan Market Overview, 2030

The India Personal Loan Market is witnessing significant growth, driven by a combination of factors such as increased financial awareness, the expansion of the middle class, and the growing use of digital platforms for lending. Personal loans are becoming an increasingly popular option for Indian consumers, who use them to meet a wide variety of needs, such as education, weddings, medical expenses, home renovation, and debt consolidation. The rise in disposable income and the growing acceptance of credit products have led to greater demand for personal loans across the country. Furthermore, the increasing penetration of digital lending platforms has made personal loans more accessible, especially in rural and semi-urban areas where traditional banking services may be limited. These platforms have simplified the loan application process, allowing consumers to apply for loans from the comfort of their homes and receive funds within a short time frame. This ease of access, combined with competitive interest rates, flexible repayment terms, and fewer formalities, has led to an increase in loan approvals and consumer confidence in borrowing. The growing preference for unsecured personal loans, which do not require collateral, has also fueled the market’s expansion, offering borrowers a convenient way to manage their financial needs without risking their assets. With the rise of digital and fintech companies offering competitive rates and innovative products, the demand for personal loans is expected to continue growing in India, catering to a broader segment of the population.

According to the research report, ""India Personal Loan Market Overview, 2030,"" published by Bonafide Research, the India personal loan market is anticipated to grow at more than 20.16% CAGR from 2025 to 2030. The factors influencing the India personal loan market are multifaceted, with economic trends, interest rates, and regulatory developments playing crucial roles in shaping the landscape. Economic growth has been a driving force behind the increased demand for personal loans, as rising incomes and urbanization fuel consumer spending. With a large and growing middle class, more people are seeking loans to fund their aspirations, from buying homes and vehicles to financing education and personal projects. However, despite the growing affluence, many Indians are still underbanked, particularly in rural areas, where access to financial services remains limited. This gap has prompted the rise of digital lending platforms, which leverage technology to serve a broader base of consumers. These platforms not only provide loans quickly but also use data analytics to assess creditworthiness, enabling them to offer loans to individuals who may not have a traditional credit history. Interest rates set by banks and non-banking financial companies (NBFCs) are also a key determinant of the personal loan market. Lower interest rates are attractive to borrowers, driving up demand, while higher rates may deter consumers from taking on loans. In recent years, the Reserve Bank of India (RBI) has worked to regulate interest rates and ensure transparency in lending practices, aiming to protect borrowers from excessive interest charges. The emergence of peer-to-peer (P2P) lending and the increasing use of artificial intelligence to streamline loan approval processes will further accelerate market growth, making personal loans an integral part of India’s financial ecosystem.

The personal loan market in India is composed of both secured and unsecured loans, each offering distinct advantages based on the borrower’s needs, financial condition, and willingness to provide collateral. Secured loans, which require the borrower to pledge an asset like property, gold, or a vehicle as collateral, are typically offered at lower interest rates due to the reduced risk for the lender. These loans are often sought for large amounts of capital, such as home loans, car loans, or for debt consolidation. In India, secured loans are a preferred choice for borrowers who have valuable assets to pledge, as they allow for better loan terms and lower rates. However, the downside is the risk of losing the pledged asset in case of default, which can be a significant concern for individuals with unstable incomes or those unable to repay the loan. Unsecured loans, in contrast, do not require collateral, making them more accessible to a wider range of borrowers, especially those who do not own substantial assets. These loans are commonly used for personal expenses such as medical bills, education fees, or wedding expenses. Unsecured loans tend to have higher interest rates compared to secured loans since they are riskier for lenders. The rise of digital lending platforms has further fueled the growth of unsecured loans, as they allow for faster loan approval, minimal paperwork, and easy access for borrowers, especially in urban areas.

In India, the personal loan market is served by a diverse range of lenders, including traditional banks, non-banking financial companies (NBFCs), and increasingly, digital lenders. Banks are the most well-established players in India’s personal loan market, offering both secured and unsecured loan products. These financial institutions are highly trusted by Indian consumers and have a large customer base due to their reputation, stability, and long-standing presence in the market. Banks typically offer lower interest rates for personal loans, especially for individuals with a strong credit history and a stable income. However, the application process with banks can be lengthy and involves extensive documentation, which may deter some borrowers, particularly those who need immediate funds. Non-banking financial companies (NBFCs) have carved out a significant niche in India’s personal loan market by offering more flexible loan products and faster approval times. NBFCs often cater to individuals who may not meet the stringent eligibility criteria set by traditional banks. As a result, NBFCs provide loans to a broader range of consumers, including those with lower credit scores or irregular incomes. Although they typically charge higher interest rates compared to banks, the quicker loan processing and more lenient approval criteria make them a popular choice for borrowers seeking immediate funds for urgent expenses. Digital lenders in India have seen rapid growth in recent years, driven by the increasing use of smartphones, internet connectivity, and technological advancements. These lenders offer a range of personal loan products, primarily unsecured, with minimal documentation and fast approval processes. Digital lending platforms, such as Paytm, Lendingkart, and Capital Float, have made borrowing easier for tech-savvy consumers, offering loans that can be applied for and disbursed directly through mobile applications. Digital lenders have reshaped the personal loan landscape in India, offering greater accessibility and convenience, especially for individuals who may not have easy access to traditional banking services.

The interest rate structure in India’s personal loan market typically features both fixed-rate and variable-rate options, each offering different benefits depending on the borrower’s financial situation and preferences. Fixed-rate loans in India are ideal for individuals who prefer predictable, stable repayments throughout the duration of the loan. With a fixed-rate loan, the interest rate remains unchanged for the entire term of the loan, which helps borrowers plan their finances and avoid any surprises due to rate fluctuations. Fixed-rate loans are commonly offered by traditional banks and NBFCs and are popular for larger loans or long-term financial commitments, such as home renovations or debt consolidation. These loans allow borrowers to lock in a competitive interest rate, particularly when rates are low, and they provide the security of fixed monthly payments that do not change over time. On the other hand, variable-rate loans are tied to benchmark rates, such as the Reserve Bank of India’s (RBI) repo rate or base rate. These loans may start with lower interest rates compared to fixed-rate loans, which can be appealing for borrowers who are looking to minimize their initial borrowing costs. However, since the interest rate on variable-rate loans can fluctuate based on changes in the benchmark rate, borrowers may experience changes in their monthly repayment amounts over time. Variable-rate loans are particularly attractive to borrowers who expect the interest rates to remain stable or decrease in the short term.

Considered in this report
• Historic Year: 2019
• Base year: 2024
• Estimated year: 2025
• Forecast year: 2030

Aspects covered in this report
• Personal Loan Market with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Loan Type
• Secured Loans
• Unsecured Loans

By Source
• Banks
• Non-Banking Financial Companies (NBFCs)
• Digital Lenders

By Interest Rate
• Fixed Rate
• Variable Rate

The approach of the report:
This report consists of a combined approach of primary as well as secondary research. Initially, secondary research was used to get an understanding of the market and listing out the companies that are present in the market. The secondary research consists of third-party sources such as press releases, annual report of companies, analyzing the government generated reports and databases. After gathering the data from secondary sources primary research was conducted by making telephonic interviews with the leading players about how the market is functioning and then conducted trade calls with dealers and distributors of the market. Post this we have started doing primary calls to consumers by equally segmenting consumers in regional aspects, tier aspects, age group, and gender. Once we have primary data with us we have started verifying the details obtained from secondary sources.

Intended audience
This report can be useful to industry consultants, manufacturers, suppliers, associations & organizations related to agriculture industry, government bodies and other stakeholders to align their market-centric strategies. In addition to marketing & presentations, it will also increase competitive knowledge about the industry.