Home Credit India says more than a third borrowers from Tier I and II cities
The alternative lending market in India will increase from US$6.44 billion in 2022 to reach US$18.61 billion by 2027, recording to CAGR of 20.5% during the five years.
An expanded economy and rising interest rates are among factors to aid the market growth, said the “India Alternative Lending Market Business and Investment Opportunities Databook” report by ResearchAndMarkets.
“The difficulties in accessing credit through conventional channels is also one of the major growth drivers for the alternative lending sector in India.”
According to a report from Inc42, the digital lending segment is expected to reach US$1.3 trillion by 2030.
The alternative lending market emerged as one of the fastest-growing fintech sectors in India in 2023. This demand for online loans has been primarily led by millennials and borrowers in Tier I and II cities.
According to a report by neo-banking platform, Freo, millennials are leading the charge when it comes to availing online loans for product purchases.
The consumer demographic accounts for 44% of the total transactions when it comes to alternative lending.
Gen Z, on the other hand, accounts for 33% of the total transactions.
Another report by Home Credit India revealed that more than a third of the total borrowers in the country are coming from Tier I and II cities.
The preference for small ticket loans is expected to further grow among consumers in Tier I and II cities, thereby supporting the industry growth over the next five years.
From the short to medium-term perspective, the publisher expects alternative lending products to also gain traction among consumers in Tier III cities and beyond, owing to the rising internet penetration in India.
This, coupled with the convenience of digital lending, will keep aiding growth in the market.
The demand for credit grew across different industry verticals in 2023 and the trend is projected to further continue over the next five years.
To capitalize on the projected growth, firms are expected to expand their presence in the alternative lending space through acquisition deals.
The demand for credit has been on the surge amid MSMEs as well as retail customers.
Rising inflation and interest rate environment mean that more businesses and consumers will turn to alternative lending products to meet their requirements.
Consequently, to fulfill the growing credit demand, firms are raising venture capital and private equity funding in India.
From the short to medium-term perspective, the publisher expects more alternative lending providers to raise funding rounds in India.
This will further drive the competitive landscape and innovation in one of the fast-growing fintech sectors, said the report. Fiinews.com
