The Fintech company’s loan book has grown exponentially:
In the middle of increasing scrutiny over digital lending practices, the Fintech Association for Consumer Empowerment (FACE) has reported a significant surge in loan disbursements by its members for the financial year 2023-24. The association, which includes 37 digital lending entities, announced a 49% increase in disbursements, amounting to Rs 1.46 lakh crore. This growth accompanies a 35% rise in the number of loans disbursed, surpassing the 10 crore mark in FY24.
The Reserve Bank of India (RBI) has expressed concerns about certain practices within the digital lending sector, prompting the RBI to draft guidelines to regulate operations in this rapidly growing industry. Despite these challenges, FACE’s chief executive, Sugandh Saxena, emphasized the sector’s commitment to customer-centricity, compliance, risk management, and sustainable growth.
In the March quarter alone, FACE members disbursed 2.69 crore loans worth Rs 40,322 crore. The average loan amount during this period was Rs 13,418, compared to the fiscal year’s average of Rs 12,648, up from Rs 11,094 in FY23. Notably, approximately 70% of these disbursements came from 28 companies operating as non-banking finance companies (NBFCs) or possessing an in-house NBFC, which experienced higher growth rates compared to their peers.
The Fintech company growth story
Regarding financing, the digital lending sector saw companies raise Rs 1,913 crore in equity and Rs 16,259 crore in debt during FY24, although there was a decrease in equity funding compared to the previous fiscal year among reporting companies. Additionally, nine companies provided data on their First Loss Default Guarantee (FLDG) arrangements, reporting 51 portfolios worth Rs 9,118 crore. A significant majority (94%) of the portfolio value was covered by FLDG arrangements with coverage ratios between 4-5%.
The profitability of fintech companies within this sector also saw an upward trend, with 83% of reporting companies being profitable in FY24, up from 76% in FY22. This financial performance underscores the robust growth of India’s digital lending industry, as well as its resilience and adaptability amid regulatory scrutiny and evolving market dynamics. As the sector continues to evolve, it remains focused on enhancing customer experiences while adhering to regulatory requirements and fostering sustainable business practices.
