Fintech lenders back on growth path in fourth quarter after Q3 slump

Data from the Fintech Association for Consumer Empowerment (FACE) shows that disbursement volumes went up 4% in the last quarter of the last fiscal year, after falling 10% in the previous quarter. Even the value of loans disbursed grew 28% to Rs 27,659 crore in the fourth quarter, after showing marginal growth of 6% in the previous quarter.

Companies such as Loantap, Niro, Fibe (previously EarlySalary), Kreditbee, OkCredit and others contributed to the report. FACE has around 40 members from the fintech lending industry.

“Last financial year, regulations brought a churn in all manners of speaking…the latest data informs us about the vital role fintech lending plays in meeting the huge credit demand,” said Sugandh Saxena, chief executive officer, FACE, at the release of the sixth edition of the FACETS report.

Regulatory actions, which disrupted multiple fintechs last year, could have caused the industry slowdown in the last quarter. However the sector has managed to quickly adjust to the new regulatory regime and scale up again. Now, with the Reserve Bank of India clarifying its FLDG rules, the industry is expected to grow faster with fresh capital coming in and disbursal volumes going up.

“It goes without saying that regulation on default loss guarantee suits the pivotal need of the fintech lending model to innovate and collaborate to offer customer-centric products to under-addressed segments at scale,” Saxena said.

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Also read | RBI has walked a tightrope with 5% cap on FLDGOverall, FY23 was much better than FY22. Around Rs 92,848 crore was disbursed last year, a 129% jump from Rs 35,940 crore a year earlier.

The sector continues to operate in the small-ticket-size space, with the average hovering between Rs 10,000 and Rs 12,000. This shows that fintech lenders continue to focus only on small-value, short-duration personal loans, consumer durable loans, or buy-now-pay-later products.

Interestingly, bucking the trend in the startup world, the digital lending industry is in hiring mode. Overall, the sector now employs 15,326 people, up from 10,779 employees last year. The share of outsourced staff is going down, too, the report said.