Surge Expected In Fintech Loan Collaborations In 2024
Fintechs are encountering hurdles in accumulating ample funds to fortify their balance sheets, which is expected to drive increased partnerships with conventional lenders. Concurrently, experts highlight a surge in compliance expenses due to the Reserve Bank of India's (RBI) stricter oversight in recent years.
Aditya Damani, the founder and CEO of Credit Fair, stated that their product focus will pivot towards secured and priority-sector loans in response to RBI's restrictions on unsecured consumer loans. To mitigate risk and enhance efficiency, Credit Fair plans to amplify collaborations with banks for loan origination and co-lending initiatives.
Several banks and non-banking financial companies (NBFCs) have urged fintech partners to limit small-ticket personal loan disbursements. Paytm, a prominent fintech player, announced its strategic shift away from post-paid loan products below Rs 50,000, emphasising a pivot towards business loans and high-value personal loans.
Paytm's strategic realignment coincides with RBI's directive to raise risk-weights on unsecured retail loans by 25 percentage points, prompting numerous personal loan-focused fintechs to recalibrate their business models. Aditya Kumar, CEO of Niro, anticipates a probable redistribution of asset classes among lenders to ensure balanced growth across unsecured and secured products. Additionally, there's an expected inclination towards perceived resilient segments for unsecured portfolios.
Account aggregators' emergence, highlighted by MobiKwik's Founder and CEO Bipin Preet Singh, is projected to encourage further collaboration within the industry.
While fintechs previously operated with lesser regulatory oversight, the RBI's intensified scrutiny in recent years, prompted by instances of borrower harassment, has led to a shift. Experts anticipate continued adjustments among these entities to adapt to the evolving regulatory landscape and its implications in the upcoming year.
Sugandh Saxena, CEO of Fintech Association for Consumer Empowerment, underlines the challenge of balancing compliance obligations, customer protection, and innovation amid heightened regulations. Aalesh Avlani, Director and Founder of Credit Wise Capital, echoes concerns about rapidly changing regulations, lack of clarity in certain areas, escalating compliance costs, and the obstruction of innovation for fintechs.
