 "Growth in fintech personal loan value moderates in first 2 quarters of FY25")
The growth rate of unsecured personal credit is normalising, with quarterly loan sanction values moderating in the first two quarters of financial year 2025 (FY25), according to a report from the Fintech Association for Consumer Empowerment (FACE), the only self-regulatory organisation for fintechs (SRO-FT).
Fintech-led personal loan sanction values grew 7 per cent and 10 per cent in Q1FY24 and Q2FY24, respectively. In comparison, quarterly growth moderated to 2 per cent and 3 per cent in Q1FY25 and Q2FY25, respectively.
On a year-on-year (YoY) basis, fintech personal loan sanction values grew 10 per cent to Rs 24,847 crore in Q2FY25, compared to Rs 22,439 crore in Q2FY24.
“For fintech loans, the initial growth spurt came from a low base and post-pandemic recovery. Now, growth rates are normalising. After a reversal in Q2FY24, there was marginal quarterly growth in Q1 and Q2FY25,” the SRO-FT said in its report.
In the first half of FY25 (H1FY25), fintech non-banking financial companies (NBFCs) disbursed 53 million loans. In comparison, traditional NBFCs disbursed 11 million, and banks gave out 6 million personal loans.
While the number of loans disbursed by fintechs was higher, the average sanction value was recorded at Rs 9,225 per loan. For NBFCs, the figure stood at Rs 96,819. The average sanction value of personal loans by banks was Rs 4,39,721.
Fintech firms commanded a majority share of the total personal loans disbursed in H1FY25. Out of 100 personal loans, these firms sanctioned 76, NBFCs 16, and banks only eight.
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However, despite the large volume, the share of sanction value for loans by fintechs was just 12 per cent. In comparison, NBFCs and banks saw their shares of sanction value at 27 per cent and 61 per cent, respectively.
In November 2023, the Reserve Bank of India (RBI) increased risk weightings for unsecured personal loans from 100 per cent to 125 per cent. The banking regulator raised risk weights in the backdrop of a surge in disbursement of such loans.