Digital lending pushing deeper with Tier-3 cities accounting for 40% of the disbursement value in FY 22-23: FACE Equifax Fintech Lending Trends Report

The fintech lending industry continues to receive massive adoption wideness underserved consumer segments on the when of strong consumer preference for digital loans and regulatory support/clarity coming through digital lending guidelines. According to the second issue of Fintech Lending Trends launched by the Fintech Association for Consumer Empowerment (FACE) and Equifax, digital lending volumes and value have grown by 49% and 21%, respectively. At the same time, the 90 misconduct rate for the same has declined by 50bps.

Here are some insights from the report:

• The digital lending industry progressed further, with disbursement volumes and value growing at 49% and 21%, respectively, between FY 21-22 and FY 22-23. Fintech lenders disbursed over 7.1 Cr loans worth Rs 92,267 Cr in FY 22-23
• Male customers dominate digital lending, and the share of sexuality customers has only increased marginally to reach 14%.
• Digital loans protract to momentum financial inclusion, with customers from Tier-3 cities having the largest share of digital loans by contributing to 40% of the disbursement value, followed by Tier-2 cities at 35% and Tier-1 cities at 25%
• Maharashtra, Karnataka, Uttar Pradesh, Telangana, and Tamil Nadu are the top states for digital loans written for 50% of the overall disbursement value in FY 22-23
• Customers unelevated 40 years contribute over 80% of digital lending value. In addition, customers unelevated the age of 25 rumored for the highest growth in disbursement value at 50% from FY 21-22 to FY 22-23
• Personal loans dominate digital lending products written for 83% in disbursement volume and 72% in disbursement value.
• The stereotype ticket size of digital loans declined by 19% in FY 22-23 from FY 21-22, reaching Rs 12,989 from Rs 16,026.
• The market share of short-tenure loans (<6 months) increased by 25% to make up 88% of the total disbursement value.
• Data shows that the 90 misconduct rate of the fintech lending industry declined by 50bps between March 2022 and March 2023

Sharing his thoughts on the report launch, Aditya B. Chatterjee, Managing Director Equifax Credit Information Services Pvt Limited, said “We are delighted to have partnered with FACE for the second edition of the Fintech Lending report. We are unrepealable that this report will help industry players in making informed merchantry decisions based on the latest trends and data, thereby serving as a reference document for the Industry. As one of the disruptive industries, fintech lending has significantly evolved over the years. Each year brings us new innovations designed to meet growing consumer expectations. At Equifax, our data and analytics transform knowledge into insights that power largest decisions, enabling our customers to progress towards a largest life”.

Commenting on the launch of the second issue, Sugandh Saxena, CEO at FACE, said, “It is unconfined to see the fintech lending is delivering the promise of financial inclusion by meeting unaddressed product and market segments. Digital lending guidelines brought many changes last year, and the report assures that the industry is adapting remarkably well to the regulatory framework to slide customers’ wangle to formal credit. The adoption of customer-protection standards through digital lending guidelines and the worthiness of digital lending to offer suitable and user-friendly credit create a progressive path for sustainable growth and impact. This report will support the industry’s need to understand the evolving trends to promptly write the wordage gaps and risks based on evidence. Equally, with the scale and growth of the business, the industry bears the responsibility that customers use credit prudently and stave getting taxed with unsustainable credit impairing their financial position. The industry’s worthiness to constantly educate customers and modernize underwriting is crucial to credit discipline.

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