RBI’s clampdown reins in fintech lending growth, yet delinquencies remain stubbornly high

Bengaluru: Fintech lending growth has cooled following the Reserve Bank of India’s (RBI) clampdown on unsecured lending. But risk metrics have not eased much, with delinquency and deep‑stage stress remaining elevated, according to credit bureau CRIF High Mark’s latest report.

Active loans grew 25.6% year-on-year to a ₹2.1 trillion portfolio by June, slower than the 29.6% year-on-year growth when portfolios were ₹1.6 trillion in June 2024. Yet the most severe stress has risen: fintech loans that are 180 days past due (DPD) climbed to 8.6% in June 2025 from 7.1% a year ago, while DPD 91-180 edged up to 2.1% from 2.0%, and DPD 31-90 remained elevated at 2.8%.

Across India, the loan stress was highest in Delhi, followed by Uttar Pradesh, recording some of the highest delinquency rates at 3.5% and 3.4%, respectively, within the DPD 31-90 bucket as of June.

The data also showed that fintech lenders have been tilting more toward secured business credit, with the share of secured business loans rising from 7.5% to 10.1%, even as unsecured small-ticket exposure continues to dominate origination volumes.

Within the fintech lenders’ secured portfolios, property-backed lending has declined to 11% in June 2025 from 13.1% in June 2023, indicating a shift away from property-based loans. However, during the same period, secured business loans increased to 10.1% from 7.5%, indicating a shift toward collateralised working capital and MSME (micro, small and medium enterprise) credit.

Fintechs have been leaning toward secured lending after RBI tightened oversight of high-interest, short-tenure unsecured loans, such as salary advances and payday‑style loans. The regulator flagged aggressive pricing by some non-banking financial companies (NBFCs) working with fintech partners in November last year.

FLDG capped

In 2023, RBI also clamped down on first-loss default guarantees (FLDGs) offered by fintechs to their NBFC partners, where a fintech agrees to compensate a regulated lender for a portion of credit losses. The regulator capped this at 5% after earlier market practices in some unsecured digital lending segments reportedly exceeded this threshold.

“Because of the tighter stance on unsecured lending, fintechs are leaning into secured products like fixed deposit-backed credit cards, hypothecated two-wheeler loans, and gold loans with lower rates and faster disbursals,” said Sachin Seth, chairman, CRIF High Mark, and regional managing director, CRIF India and South Asia.

Seth pointed out that for gold loans, the use cases have now moved beyond the usual distress loans; customers are pledging 10-40gm due to attractive rates. Gold loans, as a segment for fintechs, have grown by roughly 34-35% in the last year, he added.

Apart from this, Seth explained that a few fintechs have picked up pace in medium-sized loans against property, with tickets of ₹3-10 lakh for proprietors and small businesses.

To be sure, unsecured lending remains the dominant exposure. Unsecured loans, including personal loans and unsecured business loans, accounted for 70% of fintech’s total portfolio outstanding as of June.

Within unsecured lending, much of the contribution for fintechs came from personal loans below ₹1 lakh, which rose to a 29.2% share as of June this year, up from 28.9% in June 2024 and 27.9% in June 2023. However, growth is also coming from personal loans above ₹1 lakh, indicating a gradual shift toward higher ticket sizes; this cohort stood at a 22% share as of June 2025.

Small-ticket risk

“Most of the growth in the sub- ₹1 lakh segment is coming from buy-now-pay-later, consumption-led personal loans across e-commerce, and unsecured business loans; however, overall fintech loan growth has come down, especially in personal loans, because of tighter norms and recalibrated underwriting in that category,” added Seth during an interview with Mint.

Delinquency trends remain notably higher for smaller-ticket loans. Specifically, fintech lenders continue to exhibit elevated delinquency rates in the DPD 31-90 and DPD 91-180 buckets compared to other NBFCs across various ticket sizes, with the gap most pronounced in the sub- ₹10,000 segment.

“Usually, sub-10k loans attract first-time borrowers, younger, new-to-credit borrowers, amplifying early stress. It often arises from repeat short-cycle borrowing and rollover behaviour,” Jatinder Handoo, chief executive officer of online lender association United Fintech Forum, told Mint.

Within sub‑ ₹10,000 personal loans, DPD 31-90 stood at 4.1% for fintechs in June, compared with 1.7% for other NBFCs. In the same sub‑ ₹10,000 band, DPD 91-180 was 4.8% for fintechs, versus 1.8% for other NBFCs.

However, there has been moderate improvement in mid‑ticket fintech loans between ₹50,000 and ₹1 lakh: (DPD 31-90 eased to 2.2% in June 2025 from 2.7% in June 2024, while DPD 91-180 in the same ₹50,000-1 lakh band stood at 2.0% in June 2025, improving from 2.3% in June 2023.

New collections

The report’s borrower analysis reveals that high-risk cohorts have contracted across both fintechs and regulated NBFCs over the last two years. Fintechs recorded a sharper decline from 38.4% in June 2024 to 28.9% in June 2025 in the combined very high risk and high risk tiers, compared with NBFCs, which fell from 34.3% to 29.3%.

However, overall deep-stage stress worsened. Fintech loans categorized as DPD 180 increased from 7.1% in June 2024 to 8.6% in June 2025. This suggests that while onboarding quality has improved, collection efficiency on severely delinquent accounts has weakened.

Fintech lenders are utilizing consent-based collections and early-stress monitoring, often through the account aggregator (AA) framework, to improve loan repayment and reduce defaults, according to Seth.

“Using explicit consent obtained from borrowers at onboarding, lenders can see when funds hit accounts and time debits to reduce bounces when multiple dues cluster in a month,” he added.