Personal loans segment sees resurgence post Covid: CRIF-DLAI report

The personal loans segment has seen a resurgence post Covid led by segments such as small ticket personal loans, personal loans, gold loans, and credit cards. According to a report by credit bureau CRIF and Digital Lenders Association of India (DLAI), the total outstanding personal loans in the country more than doubled in the past four years from Rs 5.5 trillion in FY20 to Rs 11.9 trillion by the end of the first half of financial year 2024 (H1FY24).

The report observed that origination volumes in these personal loans were dominated by small ticket personal loans (STPL) with growth observed in origination values from Rs 10,000 to Rs 50,000 and those above Rs 10 lakh.

Members of the Digital Lenders Association of India (DLAI) contributed 7.9 per cent and 19.8 per cent to originations value and volume respectively in FY23, it noted.

In terms of the origination volume for the industry, loans less than Rs 10,000 dominate the digital lending space with an increasing share from FY20 to H1FY24, the report said. In FY20, its share in the pie of overall personal loans was pegged at 58.4 per cent, which increased to 63.2 per cent in H1FY24.

Similarly, another STPL category, with a ticket size between Rs 10,000 to Rs 50,000 saw an increasing share within the digital lending space. It rose from 13.9 per cent to 20 per cent in the aforementioned period.

That said, the share of personal loans with a ticket size beyond Rs 50,000 has seen a gradual decline over the past three years for the overall industry.

The contribution of loans with a ticket size of Rs 50,000 to Rs 1,00,000 declined from 7.9 per cent to 5.2 per cent in the same period.

Meanwhile, origination volumes for members of DLAI exhibit a different trend when it comes to the share of STPL and loans with a ticket size over Rs 50,000.

Between FY20 and H1FY24, the share of loans under Rs 10,000 in the overall pie of personal loans has declined from a high of 85.3 per cent to 62.7 per cent respectively for members of DLAI.

Loans with a ticket size between Rs 10,000 to 50,000 have recorded a gradual increase from 10.5 per cent to 23.1 per cent between the same time.

Meanwhile, DLAI members witnessed an increase in the share of loans between Rs 50,000 to Rs 1,00,000, which is in contrast with the industry trend. Between the aforementioned period, the share of such loans for members at DLAI saw an increase from 2.1 per cent to 6.3 per cent.

Furthermore, the report noted that between March 2020 and September 2023, the portfolio size for overall consumer lending expanded by 64 per cent on the back of financial products such as STPL, gold loans, personal loans, and credit cards.

“In a strategic collaboration, DLAI and CRIF-High Mark have produced a comprehensive report on India’s retail lending landscape and movement of Digital lenders’ portfolio in terms of quantum, quality, and outreach. This joint synthesis of insights marks a pivotal moment in understanding and interpreting the industry’s pulse, paving the way for transformative strategies that align with the nation’s aspirations for financial accessibility and technological advancement,” said Jatinder Handoo, CEO, DLAI.

“New-age digital lenders have revolutionised lending through wider reach and innovative products, and now they are also focusing on asset quality and customer selection. CRIF High Mark is committed to engaging and curating reports that are beneficial for the industry and the ecosystem at large,” said Sanjeet Dawar, Managing Director, CRIF High Mark.