A rigorous study conducted by the Fintech Association for Consumer Empowerment (FACE) reveals that 80% of the disbursed loans from digital lending platforms are attributed to borrowers below 40 years of age.
In a more detailed categorization, the age bracket of 31-40 dominates the market share in digital borrowing, closely trailed by the 26-30 demographic. Interestingly, there has been a noticeable surge in borrowing among individuals under 25, accounting for 16% of the total digital borrowing share. This segment experienced a remarkable growth of over 50% from the financial year 2021-22 to 2022-23, as indicated in the study’s second edition, which was publicized recently.
The study further underscores that the fiscal year 2021-22 to 2022-23 saw a robust growth in digital lending, with volumes escalating by 49% and values by 21%. Fintech entities played a crucial role, disbursing loans worth Rs 92,267 crore, totaling over 7.1 crore transactions during 2022-23. This proliferation is primarily due to the convenience of digital loan applications and the inclusivity of first-time credit consumers.
Another pivotal observation is the rising preference for short-term loans, particularly those with a duration of fewer than six months. These constituted 88% of the total disbursed volume in 2022-23. Economic challenges and uncertainties have led individuals with limited cash flows and savings to depend heavily on these loans. Evidently, in 2022-23, personal loans of amounts less than Rs 5,000 contributed to 68% of disbursements.
Furthermore, loans for consumer electronics, often facilitated through e-commerce platforms and retailers offering EMI conversions, have gained traction. Specifically, 40% of consumer loans ranged between Rs 10,000 to Rs 50,000 in 2022-23.
Lastly, the data highlights a shifting geographical trend in digital lending. Tier-3 cities now account for 40% of the disbursed amount, whereas tier-1 cities have seen a reduction, representing only a quarter of the market in 2022-23, down from over a third in 2020-21.