Fintech Loans Surge By 21% YoY In FY23: Report

The digital lending landscape in India has continued to evolve, with fintech players disbursing a total of Rs 92,267 crore in loans during the fiscal year ending March 2023. This figure reflects a 21 per cent year-on-year increase compared to the previous fiscal year, according to the latest FACE-Equifax Fintech Lending Trends Report.

The report further highlights that the number of loans disbursed by fintech companies surged by 49 per cent year-on-year, reaching an impressive 71 million loans in FY23, compared to 47.7 million in the preceding year. This remarkable growth in loan disbursements comes on the heels of a significant 61 per cent year-on-year expansion in the previous fiscal year, which was largely attributed to the relatively low base in FY21 caused by the disruptive impacts of the Covid-19 pandemic.

One noticeable trend in the digital lending landscape is the reduction in the average ticket size of loans. The average loan size saw a decline of 19 per cent, dropping from Rs 16,026 in FY22 to Rs 12,989 in FY23. This trend is noteworthy, especially given that the average ticket size was significantly higher at Rs 27,088 in FY21.

The report highlights the significant role of digital loans in driving financial inclusion, particularly in Tier-III cities, which accounted for a substantial 40 per cent of the total disbursement value. Following closely, Tier-II cities contributed 35 per cent, while Tier-I cities contributed 25 per cent to the disbursement value. Moreover, the majority of digital lending customers were below the age of 40, constituting over 80 per cent of the total digital lending value.

Personal loans continued to dominate the digital lending landscape, accounting for 83 per cent of the disbursement volume in FY23. This percentage remained relatively stable compared to the previous fiscal year. The share of personal loans in terms of disbursement value exhibited growth, increasing from 65 per cent in FY22 to 72 per cent in FY23.

However, a concerning trend was observed in the consumer loans segment. The market share of consumer loans, both in terms of loan numbers and disbursement amount, experienced a decline in FY23 compared to the previous fiscal years. The market share by number of loans stood at 16 per cent, while by disbursement amount, it was 15 per cent in FY23.

Additionally, short-tenure loans, those with less than a six-month tenor, gained significant popularity, constituting a significant 88 per cent of the total disbursement value in FY23, as compared to 65 per cent in FY22.

On the asset quality front, there was positive news as the 90-day-plus delinquency rate for digital loans improved, dropping to 4.04 per cent in FY23 from 4.7 per cent in FY22 and 8.6 per cent in FY21. However, digital consumer loans experienced a slight increase in delinquency, with the rate rising to 2.5 per cent in FY23 from 1.83 per cent in FY22.