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Fintech's Impact on Lending in India

The report titled "Small is BIG: How Fintechs are Revolutionising Lending" by Experian India, a regional arm of the global business services company, highlights the rapid growth of fintech in offering small-ticket loans in India. This trend is particularly notable for previously underserved segments, contributing significantly to financial inclusion.

• Fintech companies have disbursed over INR 2,48,006 crores in personal loans and INR 28,607 crores in business loans by March 2024, targeting individuals and businesses with thin credit histories or limited access to traditional financial services.
• These loans, often below INR 50,000, have reached the New-to-Credit (NTC) population, individuals with thin credit files, and sub-prime borrowers who were previously excluded from the formal financial system.

Financial Inclusion in India

The report emphasizes the positive impact of fintech on financial inclusion in India, showcasing the growth in loan disbursement across different regions.

• Fintech companies have achieved a market share of 52 per cent in personal loans, demonstrating their effectiveness in reaching underserved segments.
• In FY24, personal loan disbursal experienced a significant increase, with 24 per cent growth in Bihar, 21 per cent in Tamil Nadu, and 20 per cent in Uttar Pradesh, compared to the previous fiscal year (FY23).
• Business loans saw even more substantial growth, with a 133 per cent increase in Karnataka, 118 per cent in Uttar Pradesh, and 67 per cent in Bihar during the same period, indicating significant progress in financial inclusion across these states.

Challenges Facing Fintech in India

The white paper acknowledges the challenges faced by fintech companies in India, particularly in managing asset quality. While fintechs have successfully catered to high-risk segments, the Non-Performing Asset (NPA) ratio for fintech-originated loans remains higher than the industry average.

• This highlights the need for fintechs to strengthen their risk management frameworks, especially when dealing with customers with high levels of leverage.
• The paper suggests that improved data analytics, advanced credit scoring models, and cloud-based solutions can effectively mitigate these risks.

Fintech's Role in Green Finance and Agri-finance in India

Fintech in India is making significant strides in supporting sustainable projects and initiatives, particularly in green finance and agri-finance.

• Fintech companies are actively promoting green finance solutions, contributing to environmentally friendly projects and initiatives.
• They have made significant inroads into the agri-finance sector, providing financial support to millions of small farmers across India.

Future of Fintech in India

The white paper concludes with a positive outlook on the future of fintech in India, emphasizing its immense potential for growth.

• Manish Jain, Country Managing Director at Experian India, highlights that "The fintech revolution in India is just beginning, and there's enormous potential for growth. Fintech companies have already made a big impact by providing credit to those who need it most, but there's still more to be done. The insights in this white paper highlight both the opportunities and challenges ahead."