Fintech Personal Loan Disbursement Crosses Rs 50,000 Crore In September 2023

Fintech companies' small-value loan disbursal continues to rise in underserved regions, accounting for 62% of the overall active personal loans in the first half of FY24, according to Fintech Association for Consumer Empowerment.

"Initial spikes in growth for fintech loans rode on lower base and post-pandemic recovery. In the last few quarters, growth has been normalising," the report stated.

As of September 2023, fintech personal loan volumes stood at 4.15 crore, with an outstanding value of Rs 55,353 crore.

Fintech loans are rising in terms of ticket size, bureau vintage and risk chain, it said. Nearly half of the sanctioned loans are coming from borrowers with ticket sizes less than Rs 50,000, bureau vintages of more than five years, and mid-low credit risk, the report said.

However, portfolio quality is improving, with loans past-due for more than 90 days standing at 3.6% in September.

While average ticket size is slightly under Rs 10,000, significantly lower than personal loans disbursed by banks and NBFCs, ticket size is higher for borrowing in urban areas.

Further, FACE highlighted that the business models of fintech companies are capable of reaching borrowers who do not have a credit score and offering them small-value loans.

In rural areas, the share of digital loan borrowers is increasing. However, migration to urban areas in the last decade has skewed the geographical distribution of fintech loans. "States like Bihar, Himachal and Uttar Pradesh have a much higher percentage of rural, plausibly as migrants from these states in urban areas access fintech loans," the report said.

Female participation is worse in rural and semi-urban areas and relatively higher in north-eastern states and Kerala, FACE said.

The report also highlighted that the share of the mature borrower base is rising in fintech lending. The distribution of sanctioned value across credit scores shows that the share of mid-low risk borrowers is increasing to 59% in April–September from 36% in FY19.