Small Ticket Loans Under 1 Lakh Form 50% of Personal Loan Segment: Report

 Small ticket loans now make 50 per cent of the personal loan segment and their ticket size is below Rs 1 lakh, says CRIF High Mark report. Here are four trends observed in the lending market post Covid.

Small ticket loans with values of less than Rs. 1 lakh have contributed close to 50 per cent of the overall personal loan market. “The majority of people have preferred small-ticket loans, as they offered a quick online process, instant disbursal, better management of loans, and reduced ticket values.”

According to a report corroborated by TransUnion CIBIL Score and Google, millennials (age group 26 – 41) formed the bulk of the retail loan borrower accounts.

So, what led to this trend? Here are the details.

Some Recent Trends Seen by Fintech’s/Non-Banking Financial Companies (NBFCs)

  1. Higher Interest among Consumers after Covid-19: Sucheta Mahapatra, managing director, Branch, a personal finance application, says that they saw the demand for loans rise by two times during the peak of the Covid-19 pandemic. But at the same time, loan debt servicing was down by two times, too (due to the moratorium announced by the banks, along with other factors).

This presented a difficult situation during that time. However, she adds that now they are seeing their platform receive over 20,000 loan applications per day, and their loan platform also grew by five times, given that now the Covid-19 worries are almost over.

“Covid was a tough time for users, as well as lenders. One on hand, the overall demand for loans increased by twice from the period before. But the delinquencies increased by twice as well. This was coupled with the government moratorium period,” she added.

  1. Instant Loans Gaining Among Millennials: Loan borrowers, who are aged below 35 years, formed about 40 per cent of the total segment of personal loan borrowers. Gaurav Chopra, founder and CEO, IndiaLends, says that small ticket loans grew because of both supply and demand, especially younger consumers, who are aspirational and seek instant results.

“On the demand side, we have observed a much higher uptake from the younger, early-to-credit customers. These customers are savvy, and seek small-ticket loans for aspirational spending, not just for unforeseen expenses,” he added.

Chopra said, that to capture the interest of these younger and other audiences, lenders adapted and upgraded their technological stacks, and enabled shorter and more secure loan applications process, so that the loan process application gets done by the end consumer in minimal time, and in a convenient manner.

“The majority of people have preferred small-ticket loans, as they offered a quick online process, instant disbursal, better management of loans, and reduced ticket values,” added Garg.

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