Six months after the implementation of the digital lending guidelines, the fintech lending volumes and value have grown by 130 percent, according to a report released by the Fintech Association for Consumer Empowerment (FACE).
One of the key highlights of the report was that Fintech lending companies defy layoff trends and increased their total number of employees from 10,779 in FY21-22 to 15,326 in FY22-23, an increase of 42 percent.
The total value of loans disbursed increased by 129 percent as compared to FY21-22, growing from Rs 35,940 Cr to Rs 92,848 Cr, the sixth edition of their FACETS report. The report also suggests that the value of disbursed loans saw a slight dip in the pace of growth in the year's second half.
Total loan value increased by 23 percent between Q1 and Q2 of FY22-23 but saw a muted growth of 6 percent in Q3 over Q2 and then 13 percent in Q4 over Q3 of FY 22-23.
In a good move in the space, the Reserve Bank of India (RBI) is also set to allow fintechs to take first loss default guarantee on loans, a move that will see lending by such firms rise. A regulatory framework for FLDG (First Loss Default Guarantee) model is expected to be issued as a part of the second round of digital lending norms. Important to note that, in the immediate aftermath of the DLGs and the resulting business model changes fintech lenders had to make, digital lending volumes briefly decreased by 10 percent in Q3 of FY22-23 compared to Q2 of FY22-23. But the last quarter saw a recovery of lending volumes, recording a growth of 4 percent as compared to Q3 of FY22-23.
Sugandh Saxena, CEO at FACE, said, “Last financial year, regulations brought churn in all manners of speaking - for the good of the consumers and industry. The latest data, pleasingly, informs us about the vital role fintech lending plays in meeting the huge credit demand. Digital Lending Guidelines enable responsible growth with companies equally focusing on customer protection, risk management, compliances, and governance.
“A continuous wholesome investment by companies in these business aspects is an extremely promising sign for the industry’s future. It will progressively lead to a sustainable industry delivering better customer outcomes. It goes without saying that regulation on default loss guarantee suits the pivotal need of the fintech lending model to innovate and collaborate to offer customer-centric products to un/under-addressed segments at scale. The market is in high spirits about immense possibilities to contribute meaningfully to India’s inclusive growth,” she added.
The report suggests that there is much variety in ticket sizes across companies, but at an aggregate level, the bulk of the loans continue to meet customers’ need for small-ticket loans of less than Rs 25,000.
