A steady growth has been seen in fintechs’ personal loans as the volume reached 4.15 Cr in five years (from April 2018 to September 2023). According to a recent report by the Fintech Association for Consumer Empowerment (FACE), as of September 2023, the fintech personal loan volume is 4.15 Cr with an outstanding value of Rs 55,353 Cr.
The report presents trends for fintech lending by analysing personal loan data of 71 Fintech NBFCs from April 2018 to September 2023 stated. “Like the overall personal loan market, fintech personal loans have steadily grown. The emergence of fintech loans has played a transformative role in bringing a new market segment to formal credit by sanctioning over 18 Cr personal loans, crossing 2 Lakh Cr since Apr 18,” the report stated.
Digital personal loans by Fintech NBFCs, though worth 5% of the personal loan market by outstanding value, continue to expand their outreach by seizing vast underserved markets, starting with small-value loans, it said.
“Fintech loans are drivers of volumes, contributing to a third of overall active personal loans in September 2023 and 62% of sanction volumes in H1 FY 23-24,” the report informed.
Initial spikes in growth for fintech loans rode on lower base and post-pandemic recovery. In the last few quarters, growth has been normalising, it added. During H1 FY 23-24, in terms of sanction value, over two-thirds went to youth (< 35 years of age), 86% to males, and more than a third to borrowers belonging to Tier III and beyond.
Fintech loans are climbing up in ticket sizes, bureau vintage and risk chain, with nearly half of the sanction value coming from borrowers with ticket sizes greater than Rs 50000, bureau vintage 5 years+ and mid-low credit risk.
While the average ticket size is slightly under Rs 10,000, there is much diversity. Ticket size is higher for borrowing in metro/urban areas and increases with age, longer vintage, and better credit scores.