Fintech loan disbursement rose by 21% YoY in FY23: FACE-Equifax Report

Fintech companies disbursed loans totalling Rs. 92,267 crore (US$ 11.20 billion) in FY23, demonstrating a 21% year-over-year (YoY) rise over FY22 and consolidating development in digital lending. In FY23, 71 million loans were disbursed, a 49% YoY increase from 47.7 million in FY22, according to the FACE-Equifax Fintech Lending Trends Report.

The fintech sector disbursed loans totalling Rs. 76,396 crore (US$ 9.21 billion) in FY22, showing an increase of 61% year-over-year. In a joint analysis, the global data analytics business Equifax and the self-regulatory fintech lender group Fintech Association for Consumer Empowerment (FACE) noted that the substantial year-over-year rise in FY22 was caused by a low base in FY21 as a result of Covid-19-related consequences.

Financial inclusion is still being fuelled by digital loans, with clients from Tier-III cities accounting for 40% of the disbursement value and possessing the greatest proportion of these loans. Tier-II cities come in second at 35% and Tier-I cities at 25%. In terms of value, almost 80% of digital lending is made by customers under 40.

Personal loans dominated digital lending products, with their share accounting for 83% of disbursement volume in FY23, remaining flat compared to 84% in FY22 and higher than 63% in FY21. In terms of disbursement value, personal loans accounted for 72% of the total in FY23, up from 51% in FY21 and 65% in FY22.

By quantity of loans, the market share of consumer loans was 16%; this was down from 35% in FY21 and 15% in FY22.

Short-term loans, or those with a tenure of less than six months, accounted for 88% of the total disbursement value in FY23, up from 65% in FY22. The survey also stated that most consumers take out digital loans for brief durations, with many pre-closing their loans before their initial terms are up.

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