INDIA: Fintech and Alternative Lending Overview
- MD Finance Team
- Feb 25
- 3 min read
Updated: Feb 26
It is high time to share the report unboxing one of the world’s largest fintech markets. With a predominantly young working population and its urbanization, growing internet accessibility and technology adoption, India’s fintech landscape is rapidly evolving. Continue reading to delve into the Indian market and get insights based on the report.
India is third in the number of fintechs globally, driven by the rapidly growing digital economy, tech-savvy young citizens and expansion of financial services for various population groups. With a robust banking system and supportive regulatory landscape, India has every chance to lead the world’s fintech innovations in the next few years.
India’s Economy Brief Overview
Financial reforms and economic liberalization transformed India into an investment-attractive state. The country has become one of the world’s fastest-growing economies, with a GDP of $3.55T in 2023 and forecasted growth of 7.2% in 2024.
With an advantage of almost 70% of the working population and dominating youth, India has high prospects of growing to a $5T economy.
The low-cost internet infrastructure and the 20% rise in smartphone penetration in the previous 5 years have accelerated the spread of fintech services.
Fintech Ecosystem Offers a Pull of Opportunities
India’s fintech industry has been booming since 2020 and reached a combined valuation of $125B in 2023. The number of startups increased by 5 times, exceeding 10,200 companies and providing fertile ground to one decacorn and 15 unicorns.
The fintechs are fortunate to receive significant government support. The Reserve Bank of India (RBI) has a casting voice in regulatory issues and, at the same time, creates a favourable environment for innovations and partnerships between private companies and state authorities. In 2024, India took a valuable step towards establishing a market self-regulatory organization to evolve the fintech ecosystem further.
India built a Digital Public Infrastructure (DPI) to enable nationwide secure, cashless, paperless digital payments. Fintechs actively integrate DPI into their products. Herewith, local users prefer platforms called super apps that offer as many services in a single place, having a competitive advantage in the market.
Digital Lending Sector Among The Most Funded
India's digital lending sector is well-matured, with over 350 companies operating in the sector. The payments and digital lending sectors generate the largest revenues and funding, having a combined share of 85% in capital raised.
In 2024, 64 funding rounds brought $1.1B in investments to India’s digital lending sector. The major funds were earned by companies specializing in consumer and business loans, home loans, educational loans, and invoice financing.
The core of the alternative lending niche includes banks and NBFC-MFI (Non-banking financial companies and microfinance institutions). Together they have accumulated a major portfolio of 72% in almost equal shares. The alternative lending portfolio demonstrated 14% growth with 161M active loans as of March 2024. Positive dynamics remain the same.
“According to expert estimations, digital lending is expected to be a significant value-creator, with >$1.3Tn in AUM and 60% of total fintech revenue by 2030. Scalability opportunities for digital lending will lay in product diversification by region and customer segments, personalization and enhancing client service and launching mutually beneficial partnerships”, summarized Oleksandr Bielokhin, Senior Market Research & Analysis Specialist at MD Finance.
Download the full report, based on authoritative sources, to learn more about key figures, diverse market players, and upcoming trends.
