PhonePe is tightening lending and underwriting ahead of its IPO as the segment drives growth

PhonePe, which has built its scale on the Unified Payments Interface (UPI) with over 657 million registered users, uses payments as a distribution layer rather than a primary source of revenue. | Photo credit: SAMYUKTA LAKSHMI

Revenue from the credit and insurance distribution segment has increased from ₹28.05 crore in FY23 to ₹557.65 crore in FY25, representing a compound annual growth rate of over 345 percent. In the first half of FY26 alone, the segment generated ₹452.62 crore, almost doubling from ₹216.78 crore a year earlier. Its contribution to total revenue has steadily increased from 0.96 percent in FY23 to 7.84 percent in FY25, and further to 11.55 percent in H1 FY26.

PhonePe, which has built its scale on the Unified Payments Interface (UPI) with over 657 million registered users, uses payments as a distribution layer rather than a primary source of revenue. It acts as a lender and connects borrowers with banks and NBFCs, earning commissions without taking direct credit risk.

Since the launch of its credit distribution business in March 2023, its partner-led lifetime payouts have reached ₹14,270 crore, covering nearly 99 percent of Indian PINs. Trade loans and consumer loans for small amounts form an important part of this portfolio.

In insurance, PhonePe has facilitated the sale of 18.49 million policies, with a total premium value of ₹2,290 crore across 29 partners. It has also built a presence in digital car insurance and expanded into bite-sized ‘pouch’ products tailored to specific risks.

In FY25, the company reported operating revenues of ₹7,114 crore, up 40 percent year-on-year, with adjusted EBITDA of ₹1,477 crore and adjusted PAT of ₹630 crore. As PhonePe prepares for its IPO, PhonePe’s move into commission-based financial services with higher margins could significantly reshape its profit profile.

Published on February 14, 2026