Fintech-led personal loans in India are facing growing stress—delinquency rates for small-value loans overdue by 90+ days have hit 3.6% as of March 2025, reaching a six-quarter high . Importantly, borrowers in tier‑3 towns and beyond are seeing elevated default levels, with 90+ day delinquencies near 4.2%—higher than metro and semi-urban regions While fintechs disbursed nearly 11 crore personal loans in FY 2024–25 (accounting for 74% of volume, but only 12% of value), these smaller-ticket loans (averaging ~₹9,786) are trending toward elevated risk . Borrowers under 25, as well as those from thin credit-file segments, are particularly burdened—delinquency among the under-25 group is more than 6%, the highest of any age bracket Expansion into smaller towns and rural areas—home to over 39% of fintech disbursements—has further amplified stresses. In these locales, weak income buffers and limited financial literacy are key contributors to rising defaults.

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