Fintechs are moving fast into the consumer durables space as banks take a backseat.
Consumer durable loans disbursed by scheduled commercial banks have witnessed a decline last year, contrasting with the overall growth in most other retail loan categories as NBFCs and fintech lenders moved in.
Indian digital consumer lending market is projected to surpass $720 billion by 2030, representing nearly 55% of India’s total $1.3 trillion digital lending market opportunity. Fintech majors PhonePe, Groww, and others are gearing up to tap into the unsecured loan marketplace with consumer durable lending products. PhonePe is set to launch consumer lending on its platform by January 2024, while Groww has already introduced consumer durable loans on its application, with plans for additional credit products. The Fintech Association for Consumer Empowerment (FACE) reported that its member companies disbursed loans amounting to ₹31,692 crore in the second quarter of financial year 2024, marking a 43 per cent year-on-year increase.
According to the Reserve Bank of India (RBI), consumer durable loans initially fell to Rs 9,053 crore in August 2020 during the pandemic. However, there was a substantial increase to Rs 32,919 crore in August 2022 as consumption revived, facilitated by the surplus with banks. Despite this surge, consumer durable loans offered by banks have dwindled since then to Rs 21,221 crore by August.
While consumer durable loans declined by 42.5 per cent in this period, housing loans, credit card loans, and other personal loans recorded growth rates of 30.1 per cent, 16.6 per cent, and 15.9 per cent, respectively.
The increase in the volume of consumer products, despite the decrease in consumer durable loans from banks, may be attributed to loan disbursements from Non-Banking Financial Corporations (NBFCs) and fintech platforms. According to a TransUnion CIBIL’s report, NBFCs, private banks, and fintech companies collectively disbursed the highest share of consumer durable loans at 31 per cent, 20 per cent, and 15 per cent, respectively. In contrast, public sector banks contributed a mere 1 per cent to consumer durable loans.
The decline in consumer durable loans coincides with a growing demand for these goods in the country. According to the Trade Promotion Council of India (TPCI), consumer products in India experienced an 8 per cent surge in the value of technical consumer goods in the first half of 2023. Notably, there was a 7 per cent volume increase in air conditioners, a 6 per cent growth in the volume of washing machines, and a 4 per cent rise in the volume of microwave ovens compared to the corresponding period in 2022.
Source: bfsi.economictimes.indiatimes.com
