Digital lending in India witnesses big transformation, thanks to two specific borrower groups

GenZ and millennials are driving significant growth in India's digital lending sector, reshaping the landscape of retail credit. Redseer Strategy Consultants forecasts that digital lending will comprise 5% of all retail loans by FY28, marking a substantial increase from 1.8% in FY22 and approximately 2.5% in FY24, with a projected annual growth rate of 40%.

In FY24, digital loans facilitated a total retail credit disbursement of US$ 742.16 billion (Rs. 62 lakh crore), with GenZ borrowing between US$ 41.90- 47.88 billion (Rs. 3.5-4 lakh crore) and millennials borrowing US$ 299.26-335.17 billion (Rs. 25-28 lakh crore). Their preference for digital platforms stems from the streamlined process, eliminating physical paperwork and enabling quick approvals. Partner at Redseer Strategy Consultants, Mr. Jasbir S Juneja, noted that these younger demographics are not only consumers but are actively influencing the direction of India's retail lending market. GenZ favours personal loans, constituting 40% of their borrowing, often for immediate experiential expenses. In contrast, millennials' borrowing habits, where personal loans make up 21%, reflect a broader financial strategy likely influenced by varying life stages and priorities.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.