The share of fintechs in personal loan sanctions rose to 62% of the overall volume as on September 30, from 30% in March 2019, a report from the Fintech Association for Consumer Empowerment showed on Wednesday.
Similarly, the share of fintechs in loan sanctions rose to 10% of the overall value, from 4% nearly five years ago, the report said.
The report said the business models of fintechs are distinct in their ability to reach the under-banked customer segment in comparison to traditional lenders.
Overall, the personal loan volume of fintechs rose to 41.5 million as on September 30, from 2.3 million in March 2019. Outstanding loan value rose to Rs 55,353 crore from Rs 9,913 crore.
Medium-risk and low-risk customers constitute 59% of the fintech customer base. Around 49% of loan sanctions are less than Rs 50,000.
The share of top 10 states slightly reduced from 80% to 77%, and the top five states still account for half of the outstanding loans.
The outreach of fintech personal loans expanded to borrowers in tier-III cities and beyond. For every 10 loans given in the first half of the current financial year, four belonged to borrowers from those cities.
In fact, the share of tier III cities and beyond rose to 45% as on September 30 from 25% in March 2019. Around 67% of fintech borrowers are below the age of 35.
“Evolving digital public infra, adaptive regulation, customer preference, fintech’s will and ability to serve unmet credit needs create a conducive landscape for financial inclusion,” FACE chief executive Sugandh Saxena said, adding that the growing economy and digitisation bring huge opportunities and obligations for the fintechs.