'Unsecured credit growth slows but demand remains strong': Fibe co-founder

Digital lending company Fibe sanctioned 46.6 million loans in H2FY24, showing an 8.4 per cent increase from H1FY24. The firm has raised a total of $228 million in funding since its inception in 2015

Even as the rate of growth for unsecured credit continues to moderate for most fintech companies after the Reserve Bank of India hiked risk weights last year, the demand of such financial products continues to remain strong. 

Data from a report by Fintech Association for Consumer Empowerment, a self-regulatory organisation in the fintech sector (SRO-FT) reveal that the volume of loans sanctioned had slowed down in the second half of the financial year 2023-24 (H2FY24). 

Around 46.6 million loans were sanctioned in H2FY24, an 8.4 per cent increase from 43 million loans in H1FY24. In comparison, loan volumes had grown 22 per cent in H1FY24 from 35.1 million loans during the H2FY23. 

While fintechs are adopting a cautious approach in the unsecured credit market, they remain committed to meeting the continued demand for these financial products, according to Ashish Goyal, co-founder and chief financial officer of Fibe, a Pune-based digital lending company that was earlier known as EarlySalary.  

“In an industry where you are here for the next 10-20 years, there will be periods when you will go a little slower purely because of the given external conditions. Right now, we are cautious, but having said that we see strong momentum on the disbursement side, in building assets under management (AUM), and servicing customer sentiments,” Goyal said. 

Growth moderation and strategic focus               

The company had its assets under management pegged at Rs 4,000 crore in FY23. The numbers for FY24 are yet to be declared. Goyal attributes a ‘moderation in growth’ to a base effect playing out for companies as they continue to expand their wings. 

“While growth rates have slowed down, we also think it is just a phase since the base effect also plays out. It is much easier to grow from 100 to 200 than growing from 200 to 400,” he said. 

While other major companies such as Paytm shutting down their small ticket credit products like Postpaid, companies like Fibe are focused on catering to a cohort where the average ticket size of loans is pegged at Rs 50,000 to Rs 70,000. 

“We believe this gives us an opportunity to lend to the right set of customers. We only want to lend to the people where we are very confident that they are the right segment we are lending to,” Goyal said. 

Company secures $90 min in Series-E

In June, the company raised $90 million as a part of a series-E funding round. The funding round was led by TR Capital, Trifecta Capital, and Amara Partners. Existing investors in the Pune-based firm, such as TPG Rise Fund, Norwest Venture Partners, Eight Roads Ventures and Chiratae Ventures, also participated in the round that included primary and secondary transactions.

When asked about the company’s plans to hit the bourses, Goyal hinted that discussions around the same are ‘very premature’ even as other fintechs are rushing for public listing. 

“You don’t need an IPO because the markets are right. You need it since it is the right thing to do for the company. It is something which as of today, it’s very premature for me to say that we are in a mindset that we have deadlines and we have timelines to go for an IPO,” he said. 

Company secures $228 mn, expands user base

Cumulatively, the company has raised $228 million in funding since it was founded in 2015, according to data from market intelligence platform Tracxn. Fibe offers unsecured credit with a ticket size ranging from Rs 20,000 to Rs 5 lakh. 

While the company extends personal loans, it has also rolled out ‘buy now, pay later’ (BNPL) loans for categories such as medical and educational loans. 

At present, the company has a user base of three million customers, out of which one-third of users have already taken credit lines from the company. The firm claims to have a repeat rate of about 80 per cent.