Fintechs see exponential growth in small-ticket loans but need to focus on sustainability: Report

economictimes.indiatimes.com:

Till September 2023, 77% of the loans under Rs 1 lakh were given out by fintech lenders, from around 50% in FY18. In value terms, fintechs accounted for 50% of market share with non-banking lenders making up 25%. In FY18, this share was 34% for NBFCs and 29% for fintechs, according to the report titled ‘Charting New Horizons for Fintech Lending: Navigating Profitability and Scalability’.

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Of the loans given out by fintechs, 75% were in the sub-Rs 10,000 category with just 2% being above Rs 1 lakh. In contrast, for public sector banks the share of loans between Rs 50,000 and Rs 1 lakh stood at 89%.

Overall assets under management, specifically in the personal loan category for less than Rs 1 lakh, stood at Rs 81,000 crore, the reported added. Of these, NBFCs have a 34% market share, followed by fintechs at 33%.
In small-ticket business loans, fintechs had pushed up sourcing to Rs 39,225 crore in FY22, which had already reached Rs 32,566 crore in September 2023. This market was dominated by NBFCs with a 97% market share in FY17, but in FY23 fintechs managed to carve out a 9% market share with 39% taken by tech-enabled lending companies, the report found.

The report further observed that fintechs are tapping into new