The Q1 and Q2 of FY24 saw fintech-led personal loan sanction values increase by seven percent and 10 percent.

Compared to Q1FY25 and Q2FY25, quarterly growth is indicated to have gone down by two percent and three percent, respectively.

A report from the Fintech Association for Consumer Empowerment (FACE), the sole self-regulatory organization for fintechs (SRO-FT), the growth rate of unsecured personal credit is normalizing, with quarterly loan sanction values moderating in the first two quarters of financial year 2025 (FY25).

Fintech personal loan sanction values increased by 10 percent year over year (YoY) to Rs 24,847 crore in Q2FY25 from Rs 22,439 crore in Q2FY24.

“For fintech loans, the initial growth spurt came from a low base and post-pandemic recovery. Now, growth rates are normalizing. After a reversal in Q2FY24, there was marginal quarterly growth in Q1 and Q2FY25,” the SRO-FT said in its report.

In the first half of FY25 (H1FY25), fintech non-banking financial businesses (NBFCs) disbursed 53 million loans. In comparison, traditional NBFCs disbursed 11 million, and banks provided out 6 million personal loans.

The average sanction value per loan was Rs 9,225, despite the fact that fintechs disbursed a greater number of loans. The amount for NBFCs was Rs 96,819 in total. Banks sanctioned personal loans with an average value of Rs 4,39,721.

In H1FY25, fintech companies accounted for the bulk of all personal loans disbursed. These companies approved 76 personal loans out of 100, NBFCs 16 and banks only 8.

But even with the high volume, fintechs only accounted for 12percent of the sanction value of loans. By contrast, the sanction value shares of banks and NBFCs were 61percent and 27percent, respectively.

For unsecured personal loans, the Reserve Bank of India (RBI) raised risk weightings from 100 percent to 125 percent in November 2023. A spike in the issuance of these loans prompted the banking regulator to increase risk weights.