Chennai: Lending by fintechs for the SMEs is likely to witness a 5% rise in FY24 after RBI tightened norms on unsecured personal loans for banks and NBFCs last year. The increase in disbursements for SMEs is due to the partial diversion from the customer loan segment. Jatinder Handoo, CEO, Digital Lenders’ Association of India (DLAI) said, the RBI’s directive on risk-weighted assets (RWA) had an impact on the fintechs. The fintechs depended on the large banks and NBFCs for advances, which would be offered as loans for their end customers and SMEs. “This resulted in a part of lending by the fintechs moving towards the SMEs as they were secured loans. More financing is expected in SMEs and clean energy segments including e-mobility. Overall, lending for SMEs may move up to 28%-30%. What we are expecting is the intended results due to transmission of policy change of the RBI will be reflected in our upcoming report for the period ending March 31, 2024.” he told TOI. The report will be released in June this year.In its previous report, DLAI, an association of entities engaged in digital lending, estimated that the size of the digital lending industry, which excludes direct digital lending by scheduled commercial banks, was around $14-$15 billion as on September 30, 2023. Of this, about 70%-75% were customer loans, while SMEs accounted for the rest of disbursements.The RBI came out with a directive on the requirement for lending institutions to increase their risk weightage in November last year. Higher risk weight implies that banks have to keep aside more money as buffer when it comes to unsecured personal loans. In a nutshell, a higher risk weight restricts banks’ lending capacity. “We can see the customer loans by fintechs stabilising in FY24,” Handoo added.On the other hand, DLAI, comprising 100 members, who collectively account for disbursement of approximately $9 billion in the digital lending space, will work closely with the Economic Offences Wing of police departments in major states to create an awareness on digital lending, business models and regulations. “We will be creating an awareness among the investigating officers (IO) as they deal with complaints regarding cyber frauds and unauthorised lending apps on a regular basis,” he further said.
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