The run continues

Fintechs' lending business is growing but the industry must mind the warning signals, reports RAGHU MOHAN

- RAGHU MOHAN

You would have thought fintech (digital) lenders are being put through the wringer, hamstrung as they are by an equity-raising winter and stiffer terms when seeking bank credit lines. Think again. Data from the Fintech Association for Consumer Empowerment (FACE) has it that in FY24 loans given out by these firms topped a whopping ₹1,46,517 crore, up by 49 per cent year-on-year and spread over 101.9 million accounts (up 35 per cent).

While no sizing study has been done on this segment (it falls under what the trade classifies as those who avail of loans under ticket sizes less than 50,000), Sugandh Saxena, chief executive offer (CEO) of FACE, puts it down to "strong customer demand and preference undeniably being the driving forces behind the growth... this, coupled with the market's still modest scale, provides a long runway for healthy growth, and the market is maturing to those levels". FACE, an aspirant for the status of a self-regulatory organisation, would like you to believe that "digital lending is responsibly driving ahead with a sharp focus on customer-centricity, compliance, risk management and sustainable business models."

It's an indirect way of rejecting misgivings that firms in this business have a carpet-bombing approach while vending loans, play off weak underwriting scaffoldings, or risk delinquencies. While the average loan ticket-size in FY24 stood at ₹12,648, compared to ₹11,094 in FY23, there are whispers that given that customers have three loans running at a time it could be that evergreening is on.