Digital lending platforms see 3x year-on-year rise in disbursals to ₹14,016 crore in Q2 FY23

• Fintechs issuing digital loans witnessed an over three-fold disbursal growth in Q2.
  
• The number and value of disbursals showed an increase in both year-on-year as well as sequential basis.
  
• The average loan ticket size, however, witnessed a relatively moderate growth of 27% year-on-year to ₹8,602.
  

Digital lending platforms have seen their disbursals rise by over threefold year-on-year in Q2 FY23 to ₹14,016 crore. In the same period last year, they stood at ₹4,435 crore.

According to a report by Fintech Association for Consumer Empowerment (FACE) which collated data from 21 FACE members, disbursals grew both in volume and value terms on a year-on-year, as well as sequential basis.

The number of loans disbursed in Q2 increased 149% YoY to 16.3 million. The average loan ticket size stood at ₹8,602 — increasing 27% YoY. The report notes that the average ticket size varies across lenders due to the different target audience and segments.

“We also see upward and downward movements regarding ticket size across lenders as they transition to other products and customer segments,” the report said.

The difference in the consumer profiles and segments is also evident from the huge ‘spread’ in the processing fee and rate of interest charged by these fintech companies. According to the report, the processing fee spread is between 1.1% to 5.3%, while the interest rate spread is between 14.5% to 38.3%.

“A number of factors, including the cost of funds, operations and risk profile of customers, influence the pricing for the customers and the range is perhaps reflective of the same,” the report said, explaining the reasons for the spread.

RBI’s digital lending and microfinance norms aimed at consumer protection

The report also says new regulations in the sector will act as growth boosters.

“Implementation of RBI’s Digital Lending norms brings tailwinds for the industry as it sets clear rules and standards, boosting the confidence of the customers, fintech lenders and other market participants,” said Sugandh Saxena, CEO at FACE.

The norms were announced in August and notified in September this year. RBI’s digital lending norms provide for transparent pricing, cutting out the lending service providers out of the loan sanction process, an easier and transparent mode for borrowers to prepay their digital loans without any penalty, among other things.

In addition to this, the RBI had also announced a slew of measures for the microfinance sector, including policies for conduct of employees, preventing coercive measures against borrowers, and transparent pricing of loans.

This year, Chinese lending apps also came under scrutiny of the Enforcement Directorate, which booked cases against more than 400 apps and 50 non-banking finance companies (NBFC).

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