Fintech personal loans log 62% of sanction volumes in FY24 1st half in India: Report

Fintech personal loans have grown steadily in the country and contributed to a third of overall active personal loans in September 2023, registering 62 per cent of sanction volumes in the first half (H1) of the current fiscal year (FY24), a new report said on Wednesday.

Fintech loan borrowers are younger, with two-thirds coming from the age bracket of less than 35 years.

Fintech personal loans have contributed a vital role in financial inclusion, serving unaddressed market segments by sanctioning over Rs 2 lakh crore since April 2018, according to the report by the Fintech Association for Consumer Empowerment (FACE), an industry body convening digital lenders.

“Fintechs, while small in value, are playing a mighty role in furthering financial inclusion. As the digital economy shapes up, fintechs will expand in tandem, playing a pivotal role in customers' access to formal credit – important for their financial health and resilience,” said Sugandh Saxena, CEO of FACE.

“The growing economy and digitalisation bring huge opportunities and obligations to the fintechs,” Saxena added.

The report analysed trends from data of 71 fintech NBFCs from April 2018 to September 2023. Fintech loans consistently increased their share in the personal loan market over the years, doubling their share in sanctions since FY18-19, the findings showed.

“In loans outstanding, the share of fintech NBFCs is just 5 per cent of the total personal loans outstanding (as of September 2023) but accounts for over a third of active loan volumes,” the data showed.

In H1 FY 23-24, fintech loans accounted for 10 per cent of the sanction value but 62 per cent of the sanction volume, catering to sizeable, underserved segments with small-value loans.

Fintech loans are climbing in ticket sizes, with nearly half of the sanction value coming from borrowers with ticket sizes more than Rs 50,000, the report mentioned.

Fintech loans are moving up in the risk chain and distribution of sanctioned value across credit scores shows that the share of mid-low risk borrowers is increasing, from 36 per cent in FY 18-19 to 59 per cent in H1 FY 23-24.

Fintech loan borrowers are younger, with two-thirds coming from the age bracket of less than 35 years, said the report.