As consumers are becoming increasingly prone to carry out digital transactions, digital loans have also risen sharply in the recent past. And it is quite evident with the loan disbursements – in terms of volume as well as value – growing more than double in size, shows the industry data for December quarter.
A recently released report on digital loan disbursements by FACE (Fintech Association of Consumer Empowerment) showed that digital loan volumes grew by 147 percent and total loan value grew by 118 percent in Q3 of fiscal 2023 against the corresponding quarter of last fiscal.
Besides this, digital lenders disbursed a total of 1.8 crore loans amounting to ₹18,537 crore in December quarter as compared to 74 lakh loans worth ₹8,520 crore in the third quarter of last fiscal.
While acknowledging the impressive growth of digital loan disbursals, Sugandh Saxena, CEO at FACE, says that the data proves that the customers now trust and prefer fintech lending.
Fintech lenders have also managed to meet the increasing demand while they adhere to Digital Lending Guidelines.
“Fintech lending is accelerating the expansion of formal credit in the country across unserved and underserved market segments. Data from the latest quarter is again a demonstration of customers’ trust and preference for fintech lending and fintech lenders’ ability to meet the credit demand as they align to Digital Lending Guidelines (DLG). On the solid foundation of DLG, fintech lending will expand and get better, with a stronger focus on robust systems and processes safeguarding customers’ interests and creating value,” said Ms Saxena.
Comparing against the Q2
It is vital to note that the growth is not too impressive when December loan disbursement data is compared with that of the September quarter.
Quarter-on-quarter growth of digital loan volumes and value slowed during Q3 compared to Q2. Also, digital lending volumes and value rose by just 6 percent and 2 percent, respectively, between Q2 to Q3 of fiscal 2023.
At the same time, digital lending volumes and value rose by 21 percent and 23 percent respectively, between first and second quarter of fiscal 2023
The report further reveals that the two-third of FACE members registered positive growth rates in Q3 over Q2, and over half reported a slower growth rate in Q3 over Q2.
The average ticket size, meanwhile, has witnessed a marginal fall in the past one year, shows the report. The average ticket size in the third quarter of fiscal 2022 was ₹14,275 as compared to the average ticket size of ₹12,895 in the December quarter of 2023.
Also, the processing fee spread ranges between 1.6 percent to 6.2 percent while the interest rate spread was between 15.2 percent to 37 percent.