India Personal Loan Market Assessment, By Type [Secured Loans, Unsecured Loans], By Loan Tenure [Short Term, Medium Term, Long Term], By Age [Less than 30, 30 to 50, More than 50], By Employment Type [Business, Salaried, Others], By Region, Opportunities and Forecast, FY2018-FY2032F

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. 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.

Booming Personal Loans Distribution

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.

Digital Transformation in Banking and Personal Finances

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.

Growth in Fintech Startups and Businesses

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.

Rise of Peer-to-Peer Lending to Increase the Market Size

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.

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Future Market Scenario (FY2025 – FY2032F)

• India personal loan market is expected to expand consistently over the coming years with a growing consumer base and a large middle and low-income group who constantly require financial support for various needs.
• India personal loan market is likely to transform significantly over the coming years due to the digitalization of financial services with high and increasing emphasis on online application processes with paperless transactions and verification methods.
• On the lines of India personal loan market it is expected that data analytics and artificial intelligence (AI) will play a key role in risk assessment, credit ratings, and loan approval processes. Financial institutions are likely to leverage these tools in the near future to make processes more automated, fast-paced, and hassel free.

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	FY2024
Historical Period	FY2018-FY2023
Forecast Period	FY2025-FY2032
Projected Growth Rate	CAGR of 26.55% from FY2025-FY2032
Revenue Forecast in FY2032	USD 54.86 billion
Segments Covered	Type, Loan Tenure, Age, Employment Type
Regions Covered	East, West and Central, North, South
Key Companies Profiled	ICICI Bank Limited, Tata Capital Financial Services Ltd, Bajaj Finance Limited, Poonawalla Fincorp Limited, Aditya Birla Capital Limited, Housing Development Finance Corporation Limited, Shriram Finance Ltd, Muthoot FinCorp Ltd, Jana Small Finance Bank Limited, AU Small Finance Bank Limited, Axis Bank Limited
Customization Scope	15% free report customization with purchase
Pricing and Purchase Options	Avail the customized purchase options to fulfil your precise research needs
Delivery Format	PDF and Excel through email (subject to the license purchased). We can also provide the editable version of the report in PPT/PDF format on special request

In the report, India personal loan market has been segmented into the following categories:

·         By Type

o   Secured Loans

o   Unsecured Loans

·         By Loan Tenure

o   Short-term (Up to 6 months)

o   Medium Term (6 to 18 months)

o   Long-term (More than 18 months)

·         By Age

o   Less than 30

o   30 to 50

o   More than 50

·         By Employment Type

o   Business

o   Salaried

o   Others

·         By Region

o   North

o   East

o   South

o   West and Central

Key Players Landscape and Outlook

The several key players in India personal loan market are shaping the landscape of the integral financial services in the country. Several key players include banks, NBFCs, fintech startups, and other financial institutions are leading the charge of digital transformation of financial services and continue to shape India personal loan market.

Overall, the market is highly competitive in almost every aspect of personal loans offering similar products and services at similar interest rates and terms and conditions and players are trying to compete on improvised consumer experience and service. With the growing consumer base along with rising consumer needs and aspirations, lifestyle upgradation, and the need for flexible financial support is likely to drive the market in the forecast period. With widespread access to the internet and the proliferation of smartphones and digital devices, acceptance of digital payments will fuel online baking services for personal loans.

Key Players Operating in India Personal Loan Market are:

·         ICICI Bank Limited

·         Tata Capital Financial Services Ltd

·         Bajaj Finance Limited

·         Poonawalla Fincorp Limited

·         Housing Development Finance Corporation Limited

·         Shriram Finance Ltd

·         Muthoot FinCorp Ltd

·         Jana Small Finance Bank Limited

·         AU Small Finance Bank Limited

·         Axis Bank Limited

 

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·         How are the markets divided into different product/service segments and the market size and growth of each segment? 

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·         How are the markets predicted to develop in the future and what factors will drive or inhibit growth?

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