India’s big borrowing boom: How many people are taking loans?:Most people apply for loan on lending apps during medical urgency to meet month-end expenses

Borrowing money is no longer a last resort for Indians. Whether it is buying a new smartphone, funding a wedding, or starting a small business, more people in India are taking loans than ever before. With the rise of lending apps and customer friendly bank schemes, the way we handle credit has changed completely. You will be shocked to know purpose for which Indians turn to lending apps at last moment for loans! The reason why Indians turn up to digital lending apps at the last moment for credit is to meet the month-end expenses. This reflects financial indiscipline by the citizens that they don’t prudently manage their salaries throughout the month and towards the end when they fall short of cash, they turn towards the digital lending apps where credit is easily available! About 35% of borrowers apply for loans on our digital lending platform PayMe to meet month-end expenses. – Mahesh Mehta, Founder CEO, PayMe Today, most digital loan applications are for short-term liquidity covering rent, medical needs, and consumption gaps. – – Sarika Shetty, Co-founder CEO, RentenPe How many people in India apply for loans? According to the latest financial data for early 2026, the number of active borrowers in India has reached record levels. There are now over 16 crore (160 million) active borrowers that are on credit in the formal lending system (this includes banks and Non-Banking Financial Companies or NBFCs). This growth is driven by the younger generation. Experts note that nearly 50% of all borrowers are under the age of 30. For these young Indians, a small loan is seen as a tool to manage their lifestyle rather than a heavy debt burden. The average age of borrowers on our digital lending platform PayME is 32. – Mahesh Mehta, Founder CEO, PayMe Rise of digital loans Digital loans are the newest and fastest-growing part of the market. These are loans you get entirely through an app on your phone, without ever visiting a bank or signing a physical paper. In the last year alone, digital lending has exploded. Reports from early 2026 show that over 20% of all new personal loans are now “Digital-First.” This means that out of every 10 people taking a personal loan, 8 apply by visiting branches of banks or NBFCs. As of June 2025, there were approximately 5.7 crore active digital loan accounts in India. These loans are popular because they are small and fast—the average loan amount is often just around ₹15,000. The average loan ticket size disbursed on our lending platform PayMe is ₹30,000. – Mahesh Mehta, Founder CEO, PayME
The average ticket size of digital loans typically ranges between ₹10,000–₹1 lakh, depending on the use case. – Sarika Shetty, Co-founder CEO, RentenPe What about physical loans? “Physical loans” are the traditional way of borrowing. This is where you walk into a bank branch, talk to an officer, and hand over paper documents like your ID and salary slips. While digital loans are winning in terms of the number of people, physical loans still win in terms of the amount of money. Big loans—like home loans or large business loans—are still mostly physical. These make up nearly 80% of the total credit in the country. Digital vs. Physical: The market is now split into two worlds. Here is a simple breakdown of the current lending landscape: Digital Loans account for 20% of total advances given in the country. While, physical loans’ share is 80%. But this share is expected to reverse going forward. Why the shift? The reason is simple: convenience. In 2026, waiting for a week to get a loan approved feels outdated. With the Reserve Bank of India (RBI) introducing strict new “Digital Lending Directions” in 2025, borrowing online has also become much safer. People now trust apps as much as they trust their local bank branch. What about credit cards? With the rise of UPI, there were reports that credit card usage would cease to exist. But thanks to the Centre’s recent changes in rules relating to the country’s digital payment system, there are no threats to usage as of now. Credit card market regained lost ground thanks to Centre’s steps to allow users to link credit cards with UPI to make digital payments through fintech apps. – Mahesh Mehta, Founder CEO, PayME