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

Number of loans disbursed increased 49%; delinquency rate fell

Consolidating growth in digital lending, fintech players disbursed loans worth Rs 92,267 crore in the year ended March 2023, showing a 21 per cent year-on-year (Y-o-Y) increase over FY22. The number of loans disbursed rose 49 per cent Y-o-Y to 71 million in FY23, compared to 47.7 million, according to the FACE-Equifax Fintech Lending Trends Report.

In FY22, the fintech industry had disbursed loans worth Rs 76,396 crore, displaying 61 per cent Y-o-Y growth. The high Y-o-Y growth in FY22 stemmed from a low base in FY21 due to Covid-19 related impacts, the Fintech Association for Consumer Empowerment (FACE), a self-regulatory body of fintech lenders, and Equifax, a global data analytics company, said in a joint report.

 

The average ticket size of digital loans declined by 19 per cent to Rs 12,989 in FY23 from Rs 16,026 in FY22. The average ticket size was Rs 27,088 in FY21.

Digital loans continue to drive financial inclusion, with customers from Tier-III cities having the largest share of digital loans, contributing to 40 per cent of the disbursement value. This is followed by Tier-II cities at 35 per cent and Tier-I cities at 25 per cent. Customers below 40 years contribute over 80 per cent of digital lending by value.

Personal loans dominated digital lending products, with their share accounting for 83 per cent in disbursement volume in FY23, remaining flat compared to 84 per cent in FY22 and higher than 63 per cent in FY21. The share of personal loans in terms of disbursement value increased to 72 per cent in FY23 from 65 per cent in FY22 and 51 per cent in FY21.

The market share of consumer loans by number of loans was 16 per cent, compared to 15 per cent in FY22 and 35 per cent in FY21. Their market share, by disbursement amount, declined to 15 per cent in FY23 from 25 per cent in FY22 and 41 per cent in FY22, FACE-Equifax stated.

The market share of short-tenure loans, those with less than a six-month tenor, increased to 88 per cent of the total disbursement value in FY23 from 65 per cent in FY22. Most customers take digital loans for short periods, with many pre-closing loans earlier than the original tenure, the report added.

The asset quality of digital loans improved, with the 90-day-plus delinquency rate declining to 4.04 per cent for FY23 from 4.7 per cent in FY22 and 8.6 per cent in FY21. Digital consumer loans showed signs of stress, with the 90-day-plus delinquency rate rising to 2.5 per cent in FY23 from 1.83 per cent in FY22.