India, Dec. 12 -- The digital lending ecosystem in India spent most of 2025 learning to breathe differently. After two years of regulatory resets, liquidity swings and uneven demand cycles, the year became a litmus test for every participant in the credit chain.

Non-banks discovered that capital wasn't scarce, but confidence in their risk models and lending partnerships was. Digital lenders realised that growth at any cost had quietly gone out of fashion and that everyone is tightening their margins.

Banks, meanwhile, held their ground - steady, cautious, and increasingly selective - while the credit appetite of consumers and MSMEs moved in sharp, unpredictable waves.

By mid-2025, it was clear that the sector had split into two worlds....