Fintech Lenders Enhance Underwriting Amidst Falling Digital Loan Defaults

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Fintech Lenders Tighten Underwriting as Bad Loans Decline Across Digital Portfolios

Digital lending defaults coming down

M

Moneycontrol•18-03-2026, 12:29

Fintech Lenders Tighten Underwriting as Bad Loans Decline Across Digital Portfolios

•Indian fintech consumer lending has seen significant changes, driven by past experiences and regulatory pushes for better practices.
•90+ Days Past Due (DPD) levels for digital lending have stabilized at 3.5-4.5% over the last five years, down from 6-8% (2016-2021).
•Fintechs have shifted to disciplined underwriting since 2021, improving asset quality and focusing on profitability over aggressive growth.
•Regulatory pushes from RBI, including tighter funding and guardrails against high NPAs in small-ticket loans, have forced a flight to quality.
•The industry now recognizes that robust traditional bureau data is crucial for predicting credit cycles, not just alternative transaction data.

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