Shift in the fintech landscape
The Indian fintech landscape is witnessing a significant shift as the average ticket size of personal loans has contracted sharply. According to the Reserve Bank of India’s (RBI) ‘Currency and Finance (RCF)’ report for 2023-24, the average personal loan disbursed by fintechs plummeted to INR 9,861 in the first half of the fiscal year, marking a considerable decline from INR 10,642 in the entirety of FY23 and INR 10,955 in FY22.
Personal Loans in rural areas
This downward trend is attributed to several factors, primarily the burgeoning young borrower base and the expanding reach of personal loans into rural India. The RBI report highlights that fintechs predominantly cater to smaller loan amounts, with a substantial 68% of personal loans in FY23 falling below the INR 5,000 mark.
Furthermore, the report underscores the growing participation of women in digital lending, with the percentage of female borrowers rising from 12.9% in FY22 to 14.2% in H1 FY24. The geographical distribution of borrowers also reveals a changing landscape, as while urban and metropolitan areas continue to dominate with 56% of borrowers, rural and semi-urban regions are gaining traction, accounting for 33% and 11% respectively.
RBI scrutiny over rising delinquency rates
The RBI’s scrutiny of the fintech lending sector has intensified due to concerns over rising delinquency rates, particularly for loans below INR 50,000. In response, the central bank has implemented measures such as increasing risk weightage for unsecured consumer credit and introducing a draft framework to regulate loan aggregation by lending service providers (LSPs).
These regulatory interventions have had a ripple effect on the industry, with companies like Paytm reorienting their strategies to focus on higher-ticket loans and pausing their small personal loan business amid asset quality challenges.
Read more: Marketing News, Advertising News, PR and Finance News, Digital News
