Personal Loan Market Sees Key Changes in August 2025
The personal loan sector in India saw major developments in August 2025, shaping how people borrow money and manage their finances.
Loan Offers and Rates:
Banks like Axis Bank and ICICI Bank continued to offer competitive interest rates, starting at around 9.99% and going up to 22%, depending on the borrower’s profile. Loan amounts ranged from ₹50,000 to ₹40 lakh, with quick approvals and minimal paperwork. Digital lenders were also asked to clearly show the Annual Percentage Rate (APR), helping borrowers compare real costs better.
Regulatory Changes:
The Reserve Bank of India (RBI) introduced new digital lending rules to protect borrowers. Lenders must now provide a Key Fact Statement (KFS) before loan approval, showing details like interest rates, EMI, fees, penalties, and total cost. They also have stricter responsibilities for data protection and grievance handling.
Trends in Borrowing:
Loan disbursals reached ₹13.7 lakh crore in the first half of FY 2025, but growth slowed compared to past years. Many borrowers chose smaller loans for needs like rent, medical bills, and daily expenses rather than large investments. Rising defaults in unsecured loans also pushed lenders to be more cautious.
Economic Context:
The RBI kept the repo rate at 5.50%, while some banks cut their MCLR rates, which may lower personal loan rates further.
Summary:
August 2025 highlighted a shift toward more transparent lending, cautious borrowing, and stronger regulations. Borrowers gained from better clarity and competitive rates, while lenders adjusted strategies to manage risks in a changing economic environment.
