2025 was not a normal year for Indian lending. It was a stress test that revealed what was already simmering beneath the surface. India’s digital credit boom entered a phase of maturity. Borrower expectations shifted. Regulators tightened their stance. And NPAs rose across almost every major lending category, from digital unsecured loans to MSME and microfinance.

Most lenders blamed macroeconomic fluctuations or the sheer pace of digital credit expansion. But the real reason NPAs rose was deeper and more structural. It was not only about who borrowed. It was about how borrowers were engaged, how they were reminded, how choices were presented to them, and how lending journeys were designed.

The problem was not delinquency. The problem was communication.

The numbers told a clear story

Digital NBFCs accounted for nearly 80 percent of new personal loan origination in early FY26. That meant roughly 3 crore new loans in a single quarter and portfolios soaring to over ₹1.2 lakh crore. But stress built up just as quickly. The 180 plus DPD bucket for fintech lenders climbed from around 7.1 percent to 8.6 percent within a year. Microfinance institutions saw an even sharper hit. Their 31 plus DPD delinquencies shot up over 160 percent even as their books shrank. Stressed retail loans doubled over five years, crossing ₹6.9 trillion.

These were not isolated problems. They reflected a shift in borrower behaviour that lenders could no longer counter with traditional call-heavy recovery methods. The scale of digital credit had outgrown the scale of manual communication.

Borrowers changed faster than lending systems could adapt

Borrowers in 2025 expected frictionless, respectful, and transparent interactions. They ignored unknown calls in large numbers. They responded more to digital messages than voice attempts. They showed clear comfort with one-tap payments and UPI Autopay, which tripled in adoption within a year. They preferred reminders that gave clarity, choice, and control.

The lending ecosystem, however, was still configured for calling. Thousands of agents. Predictable scripts. Repeated attempts. Limited segmentation. No behavioural intelligence. Low reachability. Poor clarity.

Borrowers had moved on. Collection frameworks had not.

The result was predictable. More accounts rolled from early-stage delinquency into deeper buckets. More borrowers disengaged because outreach felt misaligned with their needs. And more lenders assumed the issue was borrower intent, when in reality it was borrower experience.

Compliance tightened and exposed process gaps

RBI’s 2025 directives placed strict expectations on transparency, disclosures, repayment flows, and borrower treatment. Every outreach attempt needed to be traceable. Every communication needed to be consent-driven. Every escalation needed to follow a clear process.

Traditional recovery processes struggled under these expectations. Manual calls created compliance exposure. Inconsistent communication created room for errors. Lack of audit trails created risk. Regulators effectively made compliant communication the foundation of collections.

Lenders who lacked structured digital journeys saw their operational burden rise while recovery efficiency fell.

Channel behaviour changed. Collections did not

WhatsApp messages outperformed calls and SMS. Borrowers interacted more frequently with digital reminders, payment links, and simple repayment options. Voicebots in local languages showed higher reachability than human agents. Predictive segmentation identified high-risk borrowers early. Yet most lenders still relied on the same calling-first model they had used for a decade.

The mismatch grew. NPAs followed.

The real cause. Collections had not modernised

India did not face a repayment intention problem. It faced a communication design problem.

Borrowers did not default because they were unwilling. Many defaulted because they were overwhelmed, confused, ashamed, or unreachable. Poor communication architecture accelerated rollovers into higher DPD buckets. Early-stage delinquency became the breeding ground for NPAs because lenders did not intervene with clarity at the right time, on the right channel, with the right tone.

The lenders who saw lower stress were the ones who had modernised communication. Multilingual journeys. Behaviour-led nudges. Automated reminders in the borrower’s preferred channel. Self-service repayment paths. Empathy-driven messaging. AI-powered segmentation. Consistent compliance.

This was the real differentiator in 2025.

How FrenzoFinserv helps lenders reverse this trend

FrenzoFinserv was built for exactly this shift. It is not a calling engine. It is a communication intelligence platform designed for India’s new borrower.

Here is how FrenzoCollect directly addresses the reasons NPAs rose in 2025.

1. Communication-first design that solves early delinquency

FrenzoCollect engages borrowers on channels they naturally respond to. WhatsApp. SMS. Email. AI-led voice. Multilingual messaging. Borrowers receive clarity, options, and payment links inside the first reminder itself. This reduces friction and prevents unnecessary rollovers into later buckets.

2. Predictive segmentation that prioritises the right borrowers

The platform identifies patterns across DPD buckets, repayment intent, language preference, channel behaviour, and past communication. Collections teams focus their effort where it matters instead of relying on volume-based calling.

3. Compliant-by-design communication

Every message, call attempt, consent, and interaction is automatically logged. RBI guidelines on timing, tone, frequency and treatment are enforced through workflows. Compliance teams get full audit trails without additional overhead.

4. Self-service settlements that accelerate recovery

Borrowers can settle dues or request extensions without waiting for an agent. A frustration-free path increases recovery likelihood and reduces the load on call-centre teams.

5. AI-led voice outreach that expands reachability

Voicebots operate in multiple languages, respond naturally, and escalate when human empathy is required. This preserves dignity while expanding operational coverage.

6. Lower operational cost with higher impact

Automated journeys reduce manual calling by up to 40 percent. Agents handle fewer, more meaningful conversations. Overall cost per recovery drops, even as early-stage collections improve.

7. Dashboards that finally show what matters

Collections heads, CROs and CEOs get visibility across buckets, communication performance, settlements, extensions, agent activity and compliance logs. Decision-making becomes data-driven, not anecdotal.

The takeaway for lenders

NPAs did not rise in 2025 because the borrower became riskier. They rose because communication did not evolve quickly enough to match borrower behaviour and regulatory expectations. The lenders who modernise communication will see healthier books, lower operational burden and stronger borrower trust.

The ones who do not will see the effects in their DPD curves long before they see them in their P&L.

2025 made the problem visible. 2026 will reward only those who solve it.