As it gears up for a public listing, fintech major PhonePe is aggressively scaling its lending and insurance distribution businesses to diversify revenue and reduce its heavy reliance on payments. While payments still contribute the bulk of its income, newer verticals are gaining traction, supported by rising loan disbursals, insurance policy sales, and a renewed push for a direct lending licence from the RBI.
As it prepares for an IPO, PhonePe is actively expanding beyond payments, which currently account for around 80% of its top line. The company is focusing on lending and insurance distribution to build more stable and diversified revenue streams.
Launched in 2020 (insurance) and 2023 (lending), these verticals have steadily increased their contribution over the last two years.
According to PhonePe’s updated draft red herring prospectus, the combined revenue share of lending and insurance rose to 11.55% as of September 30, 2025, compared to 3.58% in FY24.
This marks a significant shift for the company, which has historically depended on UPI payments as its primary revenue driver.
PhonePe initially entered the lending space with merchant loans. In February 2024, it expanded into consumer loans, followed later in the year by secured lending products, including:
Loans against gold
Loans against mutual funds
Vehicle-backed loans
PhonePe currently operates as a Loan Service Provider (LSP), distributing credit on behalf of its partner institutions. The platform works with 56 banks and NBFCs, enabling it to scale lending without carrying credit risk on its balance sheet.
As of H1 FY26, PhonePe’s lending arm had cumulatively disbursed ₹14,270 crore in loans.
Earlier Licence Attempts
PhonePe has made multiple attempts to secure a direct lending licence:
October 2021: Subsidiary applied for an NBFC-ND II licence
May 2022: Application returned after a related party sought a similar licence
March 2023: Second application filed
June 2023: Returned as another group entity had received in-principle approval
PhonePe has re-applied for the licence in November 2025, signalling its long-term intent to build a direct lending engine. The application is currently under review by the RBI.
PhonePe began its insurance journey with travel and Covid-19 policies, and later expanded into:
Motor insurance
Health insurance
Life insurance
Micro-insurance products
As of H1 FY26, PhonePe had:
Sold 18.5 million cumulative insurance policies
Partnered with 29 insurers
According to a Redseer report cited in PhonePe’s IPO filings:
PhonePe held a 20–25% market share in non-assisted digital two-wheeler insurance
It had a 12–15% market share in non-assisted digital four-wheeler insurance in FY25, measured by premium value
Lending and insurance distribution revenue rose to ₹452.6 crore in H1 FY26
This was up from ₹216.8 crore in the same period last year
In FY25, revenue from these businesses tripled to ₹557.6 crore
According to Redseer estimates:
Consumer and MSME loan disbursals are expected to grow from ₹115 lakh crore in FY25 to ₹207–226 lakh crore by FY30
India’s insurance market is projected to expand from ₹12 lakh crore to ₹19–21 lakh crore over the same period
These trends provide a large runway for PhonePe as it deepens its presence in both segments.
PhonePe’s growing lending and insurance businesses signal:
Reduced dependence on low-margin payments
Higher monetisation per user
Stronger long-term profitability narrative for public market investors
With regulatory approval pending and scale improving rapidly, these verticals could play a pivotal role in shaping PhonePe’s IPO valuation.