Fintech Lending in India has Streamlined the Approach of Credit Delivery, but Consumer Loans have Decreased in Size: Report

The Small Industries Development Bank of India (SIDBI) and Equifax (NYSE: EFX) have released the second edition of “Fintech Pulse,” a quarterly publication that covers major trends in the fast-growing NBFC (Non- Banking Financial Company) Fintech segment.

“Fintech Pulse” plans to offer key insights on emerging trends in India’s Fintech sector, which includes disbursements to delinquencies to “top” growing States and “top” loan categories, according to a release.

Some of the main highlights from the report are as follows:

  • Consumer and Personal Loans “continue to be strong for NBFC-Fintechs with 87% share in active loans”;
  • There is “a 38% increase in outstanding portfolios value year on year, with personal loans growing while business loans showing a decline in value”;
  • Despite growing, consumer and personal loans have “seen average ticket sizes come down by more than 40%, to less than INR 9000 (appr. $123.92)”;
  • Disbursements for personal loans are “down 71% year on year”;
  • In the overall industry, NBFC-Fintechs have acquired a market share of 2.44% “in business loans by number of active loans and 1.2% by portfolio outstanding”;
  • Business loan disbursements “by all lender types declined post-pandemic, but started recovering from Apr-June 2020 quarter for Public Sector Banks”;

There were reportedly more than 90 delinquencies for business loans (by NBFC-Fintechs YoY). The top 5 States in India contributed half of the total loans issued by Fintechs (including Uttar Pradesh, Maharashtra, Delhi, Gujarat, and Rajasthan).

Shri V. Satya Venkata Rao, Deputy MD at SIDBI, stated:

“Fintech lending has changed the approach of credit delivery in India through innovative products and real-time solutions. The industry has witnessed 38% YoY growth as of September 2020, despite COVID pandemic. As we move into the new normal, the Fintech lending industry will play a crucial role in delivering credit to last mile borrowers. I hope the Fintech Pulse will provide key insights to stakeholders.”

Shri KM Nanaiah, MD at Equifax Credit Information Services Ltd. and Country Leader, Equifax India and MEA remarked:

“We are very pleased to present the second edition of ‘Fintech Pulse’ in partnership with SIDBI. This edition sheds light on how NBFC-Fintech lending fared during pandemic times. In addition, the report has greater insights on business loans with a section devoted to the Covid-19 impact on Fintech lending.”

India’s consumer lending Fintech MoneyTap has revealed that it will be entering the booming Buy Now Pay Later or BNPL market.

The dramatic surge in digital commerce has led to Indian Fintechs like BharatPe finalizing massive investment rounds.

Other emerging Fintech segments such as digital assets have also found niche markets in India, even though regulators are reportedly planning to (attempt to) ban cryptocurrencies – which may not be possible due their decentralized nature.

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