Unsecured Lending Slowdown Puts Pressure on Digital Lenders
Happy Wednesday! In the latest financial cycle, digital lenders have felt the significant pinch of the slowdown in unsecured lending, as reported in today’s ETtech Morning Dispatch.
In This Issue:
Also Featured:
- Changing AI market paradigm
- Nazara’s latest acquisition
- 247VC launches India-focused fund
Current Situation for Listed Fintechs
Recent data reveals a marked decline in unsecured loan disbursals by banks and non-banking finance companies (NBFCs), leading to challenges for publicly-traded fintech companies in FY25.
Measuring the Impact:
- Paytm’s parent, One 97 Communications, has seen personal loan disbursals fall to Rs 1,422 crore from Rs 1,746 crore in the previous quarter.
- Mobikwik’s financial services revenue dropped by 28%, totaling Rs 402 crore in FY25, down from Rs 558 crore the year before.
- Paisabazaar’s credit card distribution fell to 517,000, lower than the 583,000 from the previous year.
Reasons Behind the Caution
Tell Me Why:
Major financial institutions are adopting a cautious approach towards the unsecured personal loan sector. Factors contributing to this shift include:
- Increased defaults in consumer loans.
- The Reserve Bank of India’s hawkish stance on spending practices.
- A shift in strategy from loan distribution to utilizing fintech for technological infrastructure.
Business Impact on Fintechs
Impact on Business:
- The once rapid growth of unsecured consumer loans is now under threat, affecting the valuation expectations for fintechs.
- Some fintech firms are experiencing pressure on their contribution margins.
- To adapt, many are refocusing on their core payment services.
- To spark growth, there’s a notable shift towards secured lending products such as loans against property and gold loans.
Also Read:
Public sector banks eye fintech partnerships for MSME lending solutions.
AI’s Evolution and the Future of Tech

Sundar Pichai, CEO, Google
During the recent I/O developers’ conference, Sundar Pichai highlighted that artificial intelligence (AI) has transformed decades of research into accessible tools for individuals, businesses, and communities globally.
New Launches from Google:
- Google recently introduced AI-enhanced search functionalities in the US, featuring advanced reasoning capabilities.
- The company plans to release an updated version of Gemini 2.5 Flash in June.
- Further, Google aims to extend Gemini’s reach to over 200 countries and territories.

Google’s Commitment to AI:
Pichai emphasized, “In our biggest markets, such as the US and India, AI enhancements are stimulating over 10% growth in the types of queries that yield results… It marks one of our most successful launches in search in the last decade.”
Sponsorship Opportunities with ETtech

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The Opportunity:
- Connect with a highly engaged audience of decision-makers.
- Enhance your brand’s visibility within the tech-savvy community.
- Explore customized sponsorship options tailored to your brand’s objectives.
What’s Next:
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Top Stories from Our Reporters

Samir Dhir, CEO, Sonata Software
IT Sector Insights:
According to Samir Dhir, mid-tier IT firms are emerging as alternatives to larger firms, positioning themselves to capture market share in artificial intelligence initiatives.
Nazara Technologies’ Acquisition:
Nazara Technologies has acquired UK-based game publisher Curve Games for Rs 247 crore, its largest international acquisition to date.
New Fund by 247VC:
The early-stage VC firm 247VC, founded by ex-100X.VC co-founders Yagnesh Sanghrajka and Shashank Randev, is launching its first India-focused fund with a base corpus of Rs 200 crore and an additional green shoe option of Rs 50 crore.
Global Picks We Are Reading
Frequently Asked Questions
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What is causing the slowdown in unsecured lending?
The slowdown is attributed to rising defaults and a cautious stance from the RBI regarding consumer lending.
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How have listed fintech companies been impacted?
Many fintech companies, like Paytm and Mobikwik, have seen significant drops in loan disbursals and revenue from financial services.
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What steps are fintechs taking in response to the slowdown?
Fintech companies are pivoting towards secured lending products and refocusing on core payment services to adapt.
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What advancements has Google introduced in the AI sector?
Google launched AI-enhanced search features and plans to extend its Gemini technology globally.
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Who are emerging players in the IT market according to Samir Dhir?
Mid-tier IT firms are positioning themselves as viable alternatives to larger firms, particularly in AI projects.