Disbursements by digital lending platforms more than tripled during Q2FY23 to Rs 14,016 crore, compared to Q2FY22, according to a report by Fintech Association for Consumer Empowerment (FACE), an industry association and self-regulatory body for fintech lenders.
FACE, a non-profit organization, represents more than 50% of the digital lending businesses in the country.
The growth comes on a low base after business took a hit during the second wave of pandemic. Volume of disbursements for Q2FY23 also doubled, growing to 1.62 crore from 65.56 lakh previously.
“The credit expansion witnessed this quarter demonstrates that the fintech industry is seizing opportunities to contribute to financial inclusion and an inclusive economy. The fintech lending industry is accelerating customers’ access to credit with more loans,” said Sugandh Saxena, chief executive, FACE, in a statement.
The report showed that the average ticket size (excluding outliers at extreme ends of low- and high-ticket sizes) was around Rs 12,368 with marginal increase of about 5% over last year. However, this varies amongst lenders due to the widely different focus on products and customer segments.
“A number of factors, including the cost of funds, operations and risk profile of customers, influence the pricing for the customers,” the report noted. The processing fee ranged between 1.1% to 5.3% and the interest rate the lender charged was between 14.5% to 38.3%.
The Reserve Bank of India (RBI) is now actively working to protect consumers interest, asking fintech lenders to follow guidelines and regulations around lending including the digital lending guidelines.
“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. Proactive efforts by multiple stakeholders to crack down on dubious lending apps are improving the ecosystem with greater customer trust and expanding the market for legitimate players,” she said.
