Amaze to see that the Digital Lending Market in India grew by 11% YoY and expected to reach USD 350 billion by 2023. In absolute term, it is worth $270 billion as highlighted by rating agency firm Experian and Praxis Global Alliance. Report has also highlighted the upcoming growth in the consumer lending segment to USD 800 billion by 2030. India has witnessed a growth of CAGR 39.5 percent over a span of 10 years.
There are huge opportunity for the big public sector banks in this area of retail banking where their growth are little. Bank of Baroda has shown the growth of approx. 10% in this segment which is strengthening its retail book.
The growth in the digital lending is well supported by rapid evolution of regulatory frameworks with 40 percent drop in manual KYC compared to digital KYC, 85 percent reduction in costs with adoption of e-KYC, and much more.
Disbursement in the Indian lending market witnessed a growth of 11 percent and reached Rs 174 trillion in FY22, compared to Rs 11.4 trillion in FY17, with a record growth of CAGR 72 %. It is also believed that the minimum disbursement will reach Rs 274 trillion in FY26 registering a growth of CAGR 12%,.
The Reserve Bank of India had earlier tightened the noose on the unauthorized digital lending apps with its new digital policy. It had come out with digital lending guidelines to protect customers data and reduce the increasing number of frauds in the system.
Also Know – How To Complaint Against Unauthorized Digital Loan Apps?
52 percent of the adult Indian population are digitally active consumers who use fintech out of which new to credit customer share as of FY22 is 36% from FinTechs, where as 24% from NBFCs and 22% from banks in 2022. The top activity among consumers online were in personal banking, including opening new loans and credit cards, registering about 58%.
The report also said that there can be five emerging opportunities for digital lending in future — Rural lending, ONDC, Green financing, CBDC and Secured loans. Rural lending aims to target the 60% of rural population which has been underserved and underbanked. ONDC potentially offers a 1.2 million seller base in the form of MSME merchant and an equally large buyer base to lend. Green financing provides credit to the growing base of green customers who are buying environment-friendly products. CBDC as a new currency and cutting-edge technology is likely to revolutionize not just payments, but also how lending will be done. Secured loans via end-to-end digital journeys will become possible as asset records get digitized and added to India stack.
