Digital Lending Growth: 32% Rise in 2024

Mumbai, May 29 (PTI) Digital lenders' portfolio grew 32 per cent year-on-year to Rs 1.3 lakh crore at the end of December 2024, a report said on Thursday.

From an asset quality perspective, the study of 140 non-bank finance companies that adopt a 'digital first' lending approach showed some uptick in segments like loans against property, business and consumer loans.

The report by Transunion Cibil, a credit information company, said 2.1 per cent of the LAP portfolio was unpaid for over 90 days in December 2024 against 1 per cent in the year-ago period, while in the consumer loans segment, the same grew to 1.6 per cent from 0.6 per cent.

Interestingly, at a time when concerns were being expressed about personal loans of under Rs 50,000, the data showed the over 90 days overdue level stable at 6.2 per cent. Instead asset quality seems to have weakened in the over Rs 50,000 personal loans, with 1.9 per cent of the book being unpaid for over 90 days as of December against 1.5 per cent in the year-ago period.

The digital lenders seem to be avoiding new to credit customers when it comes to credit origination, and instead have a proclivity towards the existing borrowers, the study said, adding that there is a greater preference for the prime borrowers within that.

It said the share of new to-credit borrowers has more than halved to 5 per cent from 12 per cent in the year-ago period, while the same for prime segment borrowers has increased to 49 per cent from 44 per cent.

Nearly 1 crore consumers availed a loan from a digital-first lender or a fintech in the first six months of 2024 and the amount sanctioned to them stood at Rs 3.6 lakh crore, it said.

A bulk 92 per cent of the new originations by volume in the December quarter were personal loans under Rs 50,000, it said, adding that even by value, it led with a 39 per cent share.

This cohort of lenders seems to be attracting younger people, the report said, pointing out that 61 per cent of the borrowers under 30 have chosen such fintechs in Q3 FY25.

Cibil's managing director and chief executive Bhavesh Jain said it is essential for such lenders to diversify their product portfolio, and added that the fintechs are at the cusp of the next evolution at present.