Digital loan disbursements increased by 118% in the December quarter, says the Fintech Association report
As consumers become increasingly inclined to carry out digital transactions, digital loans have also increased sharply recently. And it is quite clear that loan disbursements – both in volume and value – are growing more than doubled in size, industry data for the December quarter show.
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 the third quarter of fiscal year 2023 compared to the corresponding quarter in the previous fiscal year.
In addition to this, digital lenders disbursed a total of 1.8 crore loans on ₹18,537 crore in December quarter compared to 74 lakh loans worth ₹8,520 crore in the third quarter of the previous fiscal.
While acknowledging the impressive growth of digital loan disbursements, Sugandh Saxena, CEO of FACE, says the data proves that customers now trust and prefer fintech loans.
Fintech lenders have also managed to meet the growing demand while following digital lending guidelines.
“Fintech lending is accelerating the expansion of formal credit in the country across unserved and underserved market segments. Last quarter’s data is yet another demonstration of customer confidence and preference for fintech lending and fintech lenders’ ability to meet credit demand as they adapt to Digital Lending Guidelines (DLG) On DLG’s solid foundation, fintech lending will expand and improve, with a stronger focus on robust systems and processes that look after customers’ interests and create value, says Saxena.
Compares to Q2
It is important to note that the growth is not too impressive when loan disbursement data for December is compared to the September quarter.
The quarter-on-quarter growth in digital loan volumes and value slowed during the 3rd quarter compared to the 2nd quarter. Digital lending volumes and values also increased by just 6 percent and 2 percent, respectively, between Q2 to Q3 of fiscal year 2023.
At the same time, digital lending volumes and value increased by 21 per cent and 23 per cent respectively between the first and second quarter of the financial year 2023
The report further reveals that two-thirds of FACE members recorded positive growth rates in Q3 over Q2, and over half reported a lower growth rate in Q3 over Q2.
The average ticket size, meanwhile, has witnessed a marginal drop in the past year, the report shows. The average ticket size in the third quarter of fiscal year 2022 was ₹14,275 compared to the average ticket size of ₹12,895 in December quarter 2023.
In addition, the processing fee spread varies between 1.6 per cent and 6.2 per cent, while the interest rate spread was between 15.2 per cent and 37 per cent.
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