Fintech lenders disburse Rs 14k-crore loans in second quarter of FY23

Fintech lending values ​​have recovered consistently in recent quarters, outpacing last year’s growth by a huge margin.

According to The Fintech Association for Consumer Empowerment (FACE), a lobby group of around 32 fintech lenders, the total value of loans disbursed by its members increased by around 216% in Q2FY23 compared to the same period last year, while the volume of loans disbursed has a growth of 149% in the last year.

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In Q2FY23, the total value of loans disbursed by digital lending platforms stood at Rs 14,016 crore compared to Rs 4,435 crore in the total value of loans disbursed in the same quarter last year, FACE said in a report on Monday. The total number of loans registered in Q2FY23 was 1.62 crore, while in Q2 FY22 it was only around 65.56 lakhs.

FACE further added that due to Covid-induced challenges, fintech lending has had a bumpy ride in the past two financial years with choppy business trends. However, as the Covid challenges ease from Q2FY22, lenders have seen a fairly consistent upward journey.

While ticket sizes vary and continue to evolve among lenders, at an aggregate level, the average ticket sizes hover around Rs 12,000. The average ticket size saw a marginal YoY increase of 5% from Rs 11,815 in Q2 FY22 to Rs 12,368 in Q2 FY23. “Ticket sizes vary significantly among lenders due to the widely different focus on products and customer segments, and we see uneven movement among lenders,” FACE said in its report.

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In simple average terms, the processing fee spread (ranging between minimum and maximum) is 1.1% to 5.3%, while the fintech lenders in the FACE consortium charge lenders interest rates of anywhere between 14.5% and 38.3%. “A number of factors, including the cost of funds, operations and the risk profile of customers, affect prices for customers and the range may reflect the same,” the lobby group added.

The report has data from 21 FACE members that lend directly to customers, either as a balance sheet lender or as a platform working with balance sheet lenders (mostly NBFCs). Based on an industry report capturing fintech lending volumes, we estimate that FACE members account for over 50% of the non-bank retail fintech and digital consumer lending industry.

Sugandh Saxena, CEO of FACE, said the credit expansion witnessed in the last quarter shows that the fintech industry is seizing unparalleled opportunities to contribute to financial inclusion and an inclusive economy. Implementation of RBI’s digital lending brings a tailwind for the industry as it sets clear rules and standards, increasing confidence among customers, fintech lenders and other market participants, she added. “Proactive efforts by multiple stakeholders to crack down on questionable lending apps improves the ecosystem with greater customer trust and expands the market for legitimate players. There is no doubt that the fintech lending industry will move forward with confidence to create innovative customer journeys that aggregate customer protection,” said Saxena .