India personal loan market is projected to witness a CAGR of 26.55% during the forecast period FY2025-FY2032, growing from USD 8.34 billion in FY2024 to USD 54.86 billion in FY2032.
MX11298 128 Pages May 2024 BFSIIndia personal loan market is projected to witness a CAGR of 26.55% during the forecast period FY2025-FY2032, growing from USD 8.34 billion in FY2024 to USD 54.86 billion in FY2032. The personal loan market in India has always been strong and has expanded significantly over the years, owing to numerous factors, and being a middle-income economy. India personal loan market is a very dynamic and competitive market filled with numerous players from banks to NBFCs (Non-banking financial companies) being the primary players in the market, bringing new concepts of peer-to-peer lending are through internet penetration and increasing financial education. These institutions provide personal loans to various consumers at competitive yet flexible tenure and interest rates, which adds to the competitive landscape.
India personal loan market is growing due to various factors such as urbanization, digitalization, changing lifestyles and a rise in consumer spending. In the current scenario with the age of digitalization, consumers have started to spend more on lifestyles, for instance, buying expensive smartphones and watches, increasing spending on travel and weddings, etc.
India personal loan market has witnessed many changes over the span of years, from filling out papers, forms, and applications and waiting for days for loan approval to now getting instant approvals with just a few clicks on the smartphone and the loan amount being credited to the bank account within days. India with a population of over 1.4 billion people holds a large customer base in the realm of consumer personal loans and advances which is a boon for the key market players at every level and their geographical presence.
According to a report by rating agency CareEdge, personal loan credit by banks and NBFCs has nearly tripled in the last six years to INR 51.7 trillion, accounting for 30.3% of the total loan book as of March 31, 2023, up from Rs 18.6 trillion or 21.5% on March 31, 2017.
India personal loans have been on an upward trend over the years due to the growing needs and requirements of Indian consumers for various purposes such as traveling, buying luxury goods, or be it in the form of advances for marriages. Financial institutions, such as banks and NBFCs, have started offering personalized loan products to customers tailored to specific customer segments and purposes. For intance, specialized personal loans for weddings, travel, education, or medical expenses with customized features and repayment terms are gaining popularity. The personal loan market in India has become highly competitive, with traditional banks, NBFCs, and fintech companies vying for market share. This competition has led to innovations in product offerings, interest rates, and customer service to attract borrowers.
In December 2023, personal loans were increased by 32% year-on-year, with a quarter-on-quarter growth rate of around 10%. Personal loan disbursements have increased by 141% in the last two years, highlighting the growing trend of consumers resorting to credit for financial support in times of growing uncertainties.
Over the years, the Indian economy has been heading towards digitalization and financial institutions have been at the forefront of the digital transformation of their products and services. The rise of digital lending platforms has transformed the personal loan landscape, making it easier and more convenient for individuals to access funds. Funds are applied, verified, and sanctioned digitally within a limited time frame and the digital lenders leverage technology to streamline the application process, reduce paperwork, and offer quick approval and disbursement of loans, thus, making the whole process seamless and much faster.
Technological innovation is playing a critical role as banks use innovations to speed lending operations, improve risk assessment, and reach previously unbanked and remote communities. This contributes greatly to the growth of credit operations. In the fourth quarter of India during FY2023-FY24, personal loan advances amounting to INR 64,778.27 crores were disbursed among various types of consumers, outshining other loan categories such as education loans, auto loans, healthcare financing, and gold loans.
In keeping with the government's aim for a digital economy, State Bank of India has embraced emerging technologies such as Central Bank Digital Currency (CBDC), launching test projects to connect CBDC with current payment ecosystems such as UPI.
With the growth in Indian banking sector and integration of technologies in the financial businesses, the emergence of fintech companies, new age fintech startups and alternative lending platforms has disrupted the traditional lending landscape. Fintech lenders leverage technology and data analytics to offer personalized loan products, expedite loan approvals, and cater to underserved segments of the population, further drive the growth of India personal loan market. In the current age, where borrowers are looking for fast and convenient solutions to their needs in terms of personal loans, startups and platforms leverage various technologies to instantly help consumers, relatively to expedite the process.
In 2024, DigitMoney announced the debut of its unique platform in India, which provides a game-changing solution in the domain of personal loans. With the potential to give borrowers with fast pre-approved loan offers, this revolutionary platform is poised to alter the borrowing experience for people across the country. DigitMoney leverages solid partnerships with key lending institutions to shorten the loan application process, making it completely digital and eliminating the need for lengthy documentation.
In the Indian context, peer-to-peer lending is not a new concept however access to the Internet and digitalization of the market have changed the dynamics over the past decade and peer-to-peer lending has turned into an innovative and convenient means of financing. Peer-to-peer (P2P) lending platforms have gained traction as alternative sources of personal loans. These platforms connect individual borrowers with investors willing to lend money, providing an alternative financing option for those who may not qualify for traditional bank loans.
One key feature and concept of peer-to-peer lending is the elimination of a financial institution as an intermediary in the deal between a lender and a borrower. In the Indian market, peer-to-peer lending is becoming popular among Indian demographics due to the various benefits offered by the service such as ease of access, flexibility, more control over the lending, and constant returns on investment. India peer-to-peer lending market is growing at an impressive growth rate owing to the growing Indian economy, urbanization, rising disposable income, rise in consumer spending, and especially, digitalization.
Future Market Scenario (FY2025 – FY2032F)
Report Scope
"India Personal Loan Market Assessment, Opportunities and Forecast, FY2018-FY2032F”, is a comprehensive report by Markets and Data, providing in-depth analysis and qualitative and quantitative assessment of the current state of the India personal loan market, industry dynamics, and challenges. The report includes market size, segmental shares, growth trends, COVID-19 impact, opportunities, and forecast between FY2025 and FY2032. Additionally, the report profiles the leading players in the industry mentioning their respective market share, business model, competitive intelligence, etc.
Report Attribute
Details
Base Year of the Analysis