Fintech companies have been steadily increasing their lending in personal loans since April 2018. According to a report by the Fintech Association for Consumer Empowerment (FACE), these lenders have issued over 2-lakh crore loans by September 2023.
Fintechs’ Share in Personal Loans
- Fintechs made up a significant portion of active personal loans, comprising one-third by September 2023.
- In the first half of FY24, they were responsible for 62% of loan sanctions, indicating their growing influence.
Market Share Growth
- Fintechs have doubled their market share in personal loan sanctions since FY19.
- The number of loans and their value has seen significant growth from H1 FY19 to H1 FY24.
Loan Distribution and Characteristics
- Fintech NBFCs’ share in total outstanding personal loans is 5%, but they account for over a third of active loan volumes.
- Loans are increasingly going to borrowers with longer credit histories and moderate to low risk.
- Most borrowers have bureau records of over 3 years, and half of them have records of over 5 years.
- Mid-low risk borrowers have seen an increase in share from 36% in FY19 to 59% in H1 FY24.
- Majority of borrowers are under 35 years old.
Loan Characteristics by Ticket Size
- Average loan size is around ₹10,000, with higher values in metro urban areas.
- Larger loan sizes are associated with older borrowers, longer credit histories, and better credit scores.
Role in Financial Inclusion
- Despite their smaller size in terms of loan value, fintechs are crucial for expanding financial inclusion.
- Their role is expected to grow further as the digital economy expands.
Regional Distribution
- Top 10 states account for the majority of outstanding loan value, with the top 5 states contributing over half.
- Loans are dispersed across 721 districts in 35 States/UTs, with 108 districts having over ₹100 crore in outstanding value.
Expansion into Tier-III Cities
- In H1 FY24, more than a third of loan value went to borrowers in Tier-III cities and beyond.
- These cities have witnessed a significant increase in their share of loan value since FY19.
