The digital lending industry is betting big this festive season as it sees an upsurge in demand as consumers prepare to loosen their purse strings and merchants stock up to meet the additional demand.
For digital lending platforms, overall disbursals could go up by an average of 15-20 per cent during the festive period due to easy access to credit and a range of offers, benefits, cashback, and zero-fee deals. “The retail sector foresees a promising year ahead, with customers gearing up to increase their spending and retailers preparing to meet the heightened demand. The digital lending sector this festive season foresees a substantial 15-20 per cent increase in demand as digital lending firms are giving easy access to credit to ensure that this festive season is truly special even if it requires a little financial assistance,” said Manika Mittal, Communications Head, BalanceHero India.
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Mumbai-based platform NeoGrowth is hoping to take its quarterly credit disbursal to ₹750 crore during the current festive season. “Festive season credit demand builds over a period of two to three months, leading up to the festivals. Retail MSMEs need credit to stock up inventory to meet the anticipated surge in consumer demand during the festive season,” said Arun Nayyar, MD and CEO, NeoGrowth.
Loan applications start seeing an uptick as early as August, continuing for the next 2-3 months till the end of the festive season, he added.
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Amazon reported that 25 per cent of the shopping orders placed on the platform were funded through installments and that three out of four EMI offers were no-cost ones, where the customer does not have to pay any interest on the pay-later loan. Flipkart Pay Later grew by 4X in the last eight days during the sale event.
Loan enquiries up
In comparison to last year, loan enquiries in recent months have shot up by 150 per cent, said Hardika Shah, founder, Kinara Capital. Disbursement is 11 per cent higher month-on-month, she added.
Business loans to MSMEs will see a 20 per cent rise this festive season, Shah said. Component manufacturers catering to consumer durables as well as automobile industries and textiles are the leading sub-sectors driving the demand for business loans. “With consumer spending expected to grow manifold this festive season, MSMEs are leaving no stone unturned. The rise has been most significant for short-term loans. As consumer spending is projected to rise further in the upcoming months, the demand and disbursement is also expected to shoot up. We are anticipating a 20 per cent y-o-y rise in disbursement this festive season,” she said.
While banks and NBFCs have dominated this segment with offers on cards for consumers and business loans for merchants, the fintech lending industry is seeking a larger share of the credit pie.