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Frenzy in India’s digital lending market sees over 200% growth in Q2 credit disbursement: Report

Credit and finance for MSMEs: The average ticket size at an aggregated level stood at Rs 12,368 with marginal changes during Q2 in comparison to Rs 12,451 during Q1 and Rs 11,815 during Q2 last fiscal.

Frenzy in India’s digital lending market sees over 200% growth in Q2 credit disbursement: Report
Much like ticket size, there were significant spreads in pricing, processing fee and interest rate during Q2.

Credit and finance for MSMEs: Digital lenders in the country have registered a sharp growth in both the number of loans and the amount disbursed during the second quarter (July-September) of the current fiscal from the year-ago period, according to a report by the Fintech Association for Consumer Empowerment (FACE), a representative body of 21 fintech lenders offering personal as well as business loans including credit to small businesses. The report, sourcing data from these FACE members, noted 149 per cent growth in loans disbursed from 65.56 lakhs during Q2 FY22 to 162.95 lakh during Q2 FY23.

Likewise, the amount disbursed jumped 216 per cent from Rs 4,435 crore to Rs 14,016 crore during the said period. Quarter-on-quarter, the volume and value of loans increased by 21 per cent and 24 per cent respectively. During Q1 FY23, 135.13 lakh loans amounting to Rs 11,296 crore were disbursed, the report FACETS showed in its latest edition.

“The credit expansion witnessed this quarter demonstrates that the fintech industry is seizing unmatched opportunities to contribute to financial inclusion and an inclusive economy. The fintech lending industry is accelerating customers’ access to credit with more loans. Implementation of the RBI’s Digital Lending brings tailwinds for the industry as it sets clear rules and standards, boosting the confidence of the customers, fintech lenders and other market participants,” said Sugandh Saxena, CEO, FACE. 

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The average ticket size at an aggregated level stood at Rs 12,368 with marginal changes during Q2 in comparison to Rs 12,451 during Q1 and Rs 11,815 during Q2 last fiscal. However, the ticket size significantly varied among lenders due to the widely different focus on products and customer segments, the report added. For instance, among FACE members, Kissht caters to small businesses, LoanTap offers multiple products including personal loans and MSME loans, Yubi is a debt platform for businesses, while Stashfin is only into personal loans.

Much like ticket size, there were significant spreads in pricing, processing fee and interest rate during Q2. For example, the processing fee ranged from a minimum 1.1 per cent to a maximum 5.3 per cent while the interest rate was spread from 14.5 per cent to 38.3 per cent. According to the report, a number of factors, including the cost of funds, operations and risk profile of customers, influence the pricing for the customers and the range was perhaps reflective of the same.

Importantly, the demand for MSME loans as of Q4 FY22 grew 1.6 times the pre-pandemic levels (Q4 FY20) on the back of improvement in broader economic activity after the second wave of the pandemic and extension of the Emergency Credit Line Guarantee Scheme (ECLGS) scheme, a SIDBI report MSME Pulse had noted in August this year. The availability of enriched credit data and higher adoption of digital lending also facilitated the sustained increase in credit demand. During September 2022, the aggregate bank credit deployed to the MSME sector increased by 27 per cent to Rs 18.55 lakh crore from Rs 14.61 lakh crore in September 2021, according to the RBI data. 

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First published on: 28-11-2022 at 01:29:07 pm