IPO-bound PhonePe scales up lending & insurance biz

As it prepares for a public listing, fintech major PhonePe is scaling up its lending and insurance distribution businesses to diversify its revenue base. It remains heavily reliant on its payments vertical which contributes about 80% of its top line. The company is simultaneously reviving its long-running effort to secure a lending licence from the Reserve Bank of India (RBI), after a couple of failed attempts. Launched in 2020 and 2023, respectively, PhonePe’s insurance and lending verticals have slowly scaled up their share of revenue over the last two years. Breaking the 80% Payments Dependency As of September 30, 2025, the share of revenue from its lending and insurance businesses has increased to 11.55% from 3.58% in FY24, according to its updated updated draft red herring prospectus. PhonePe, which initially started with merchant loans, began offering consumer loans in February 2024, and secured lending products such as loans against gold, mutual funds and vehicles later that year. The company operates as a loan service provider (LSP), distributing credit on behalf of the 56 banks and non-banking financial companies (NBFCs) it has partnered with. Alongside its distribution-led approach, PhonePe has made repeated attempts to secure a direct lending licence.The company disclosed in its IPO documents that PhonePe’s subsidiary first applied for an NBFC-ND II licence (non-deposit taking) in October 2021, but the application was returned by the RBI in May 2022 after a related party had also sought a similar licence. A second application filed in March 2023 was returned in June that year, as another group entity had already received an in-principle approval for an NBFC licence. Direct Lending Engine PhonePe has since re-applied for the licence in November 2025, signalling its intent to scale up its lending arm in the long run. The application is currently under review by the RBI. For now, the company’s lending business has cumulatively disbursed Rs 14,270 crore in loans, as of the first half of FY26. Besides lending, its insurance distribution business has also grown over the past few years. PhonePe started with offering travel and Covid-19 insurance, and later expanded into motor, health, life, and micro-insurance products. As of H1 of FY26, the platform had sold 18.5 million cumulative insurance policies, working with 29 insurers.According to a Redseer report cited in the IPO papers, PhonePe commanded a 20-25% market share in non-assisted digital two-wheeler insurance, and a 12-15% share in non-assisted digital four-wheeler insurance in FY25 by premium value. Its lending and insurance distribution revenue nearly doubled year-on-year to Rs 452.6 crore in the first half of FY26 from Rs 216.8 crore in the year-ago period. In FY25, revenue from these businesses rose threefold to Rs 557.6 crore. While the revenue growth is encouraging, the opportunity, too, remains sizable. India’s consumer and MSME loan disbursals are expected to expand from Rs 115 lakh crore in FY25 to Rs 207-226 lakh crore by FY30, while the insurance market is projected to grow from Rs 12 lakh crore to Rs 19-21 lakh crore over the same period, according to Redseer estimates.