Small Personal Loan Disbursement
                     Small Personal Loan 
Disbursement
Small Personal Loan Disbursement has Grown 5 Times in 2 Years
The credit of below Rs. 50,000 is considered a small-ticket personal loan and is primarily offered by
NBFCs (Non-Banking Financial Companies) and Fintech startups.
As per a report by the CRIF India, the disbursement of small personal loans during the last two years
has jumped almost 5 times. The share of small personal loans shot up close to 60% by March 2020
from 12.9% of the disbursed amount during 2017-18. Software deployed by finance companies and
Fintech to approve and disburse instant loans based on analytics is the key driving force behind this
jump in loans. The report suggests low-income borrowers are applying for an instant loan to meet
their daily requirements rather than emergency purposes.
New-age lenders and Fintech players are using modern technology to disburse this type of loan to
target low-income as well as tech-savvy customers who need cash to meet short-term financial needs
and have no or limited credit history. In the financial year 2020, the proportion of loans disbursed to
individuals with income below Rs. 3 lakh per annum has increased over the three years, reaching 69%
in new loans. Also, customers whose application is turned down by the traditional lenders are going for
small personal loans.
Loans of Rs. 5000 or less contribute to more than 50% of volume share in small personals as of March
2020. This suggests that payday loans and the concept of checkout finance are gaining popularity
among customers. The disbursal trend indicates millennials and young borrowers in the age group 18 –
30 years have increased from 27% to 41% in the last 2 years.
Among lenders, NBFCS continue to expand, doubling their market share in the last two years. It has
been observed that the current market share of NBFCs in the small-ticket loan market is 42 percent as
of August 2020. Whereas, public sector banks and private sector banks have been losing share in the
small loan market over the last 2 years.
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