Delinquency rates for digital credit industry at 4.2% in FY23: report

economictimes.indiatimes.com:

Delinquency rates for India’s digital lending industry fell 50 basis points to 4.2% in FY23, according to a report by Fintech Association For Consumer Empowerment (FACE) and credit rating agency Equifax. For the digital lending industry, which came under pressure during Covid-19, FY21 and FY22 were tough years as several large credit fintechs had to provision for bad loans due to rising delinquency rates, thus accumulating losses, the report said.

Overall industry delinquency rates have stabilised from 8.6% at the end of FY21 to 4.7% by end-FY22, it added. Delinquency rate in lending represents the percentage of loans that are due and is an indicator of the health of the lender's portfolio.

Now, as macroeconomic headwinds hit businesses globally, delinquency rates for business loans have seen an uptick in FY23, crossing the 4% threshold as of March, data from the report showed. Even consumer loans have seen a rise in delinquency rates amidst inflationary winds, from 1.83% in FY22 to now 2.5% in FY23.

ET reported earlier that in a bid to minimise risk, balance sheet fintechs such as Lendingkart have moved into co-lending, thereby effectively becoming a loan sourcing platform for their larger peers, while keeping a small portion of the loan on their books.Also read | What is really happening with digital credit in IndiaDisbursement jumps As per the report, FY23 saw the Indian digital lending industry dole out 7.1 crore loans amounting to Rs 92,267 crore. This is a 49% year-on-year jump in terms of number of loans, and 21% in terms of loan value disbursed, signalling a recovery for the sector.

Personal loans still contributed to 72% of the overall loan disbursed in FY23. Further, average ticket sizes for the overall digital