Fintech Titans Target Consumer Durable Loans in India

28 Dec, 2023

Fintech Titans Target Consumer Durable Loans in India

India's digital consumer lending sector is primed to exceed $720 billion by 2030, a substantial portion of the country's $1.3 trillion digital lending landscape. Fintech majors like PhonePe and Groww, among others, are strategically positioning themselves to capitalize on this burgeoning market, particularly targeting the unsecured loan sector.

PhonePe, a prominent player in digital payments, is gearing up to introduce consumer lending services on its platform by January 2024, as per insider sources. The company recently unveiled a dedicated section within its app for users to access their credit bureau scores. This feature allows users to manage their credit or Rupay cards, repay loans, and settle credit card bills seamlessly, all at no extra cost.

Collaborating with five lending partners comprising banks and non-banking financial companies (NBFCs), PhonePe aims to establish itself as a distributor for personal loans. The initial phase will focus on gradually strengthening its credit underwriting capabilities.

An anonymous source revealed, "PhonePe plans to commence consumer lending in January and anticipates rolling out multiple consumer credit products within the next six to seven months."

Presently, PhonePe extends services including life, health, motor, and car insurance in association with partners like Acko. Additionally, it facilitates monthly subscription payments through UPI. Earlier this year, it ventured into merchant lending, extending loans of up to ₹5 lakh to its merchant user base.

Meanwhile, Groww has already launched consumer durable loans on its platform, alongside merchant loans. Future plans include venturing into home loans, personal loans, and various other credit products.

For fintechs involved in distribution, while the regulated entity manages the final underwriting, building a substantial customer base with high approval rates is pivotal. This factor significantly influences the partnership's quality for lenders and determines the potential portfolio performance.

Recently, the Fintech Association for Consumer Empowerment (FACE), a digital lending industry body, highlighted in its eighth FACETS report that its member companies disbursed loans amounting to ₹31,692 crore in the second quarter of the financial year 2024 (Q2 FY24). This marked a substantial 43% year-on-year increase from ₹22,236 crore in Q2 FY23.