Digital Loan Disbursements Jump 49% to Rs 1.46 Lakh Cr in FY24, Says Industry Body

Amid growing scrutiny over digital lending practices, the Fintech Association for Consumer Empowerment (FACE) revealed a significant surge in loan disbursements by its members for the financial year 2023-24. The association, which comprises 37 digital lending entities, reported a 49% increase in disbursements, amounting to Rs 1.46 lakh crore. This growth is accompanied by a 35% rise in the number of loans disbursed, crossing the 10 crore mark in FY24.

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The Reserve Bank of India (RBI) has expressed concerns regarding certain practices within the digital lending sector. In response, the RBI has been proactive in drafting guidelines to regulate operations within this burgeoning industry. Despite these challenges, FACE's chief executive, Sugandh Saxena, emphasized the sector's commitment to customer-centricity, compliance, risk management, and sustainable growth.

During the March quarter alone, FACE members disbursed 2.69 crore loans valued at Rs 40,322 crore. The average loan amount for this period stood at Rs 13,418. Comparatively, the average loan size for the entire fiscal year was Rs 12,648, marking an increase from Rs 11,094 in FY23.

A significant portion of these disbursements, approximately 70%, originated from 28 companies that either operate as non-banking finance companies (NBFCs) or possess an in-house NBFC. These companies have reportedly experienced a higher growth rate compared to their counterparts.

In terms of financing, the digital lending sector saw companies raise Rs 1,913 crore in equity and Rs 16,259 crore in debt during FY24. However, there was a noted decrease in equity funding compared to the previous fiscal year among reporting companies.

Furthermore, nine companies provided data on their First Loss Default Guarantee (FLDG) arrangements. They reported 51 portfolios worth Rs 9,118 crore, with a significant majority (94%) of the portfolio value covered by FLDG arrangements with coverage ratios between 4-5%.

The profitability of companies within this sector also saw an upward trend. According to FACE's data, 83% of reporting companies were profitable in FY24, an increase from 76% in FY22.

This financial performance highlights not only the robust growth of India's digital lending industry but also 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.