The Indian digital consumer lending market is projected to surpass $720 billion by 2030, representing nearly 55% of India’s total $1.3 trillion digital lending market opportunity. Fintech majors PhonePe, Groww, and others want to tap into the unsecured loan marketplace with consumer durable lending products.

Digital payments major PhonePe is set to launch consumer lending on its platform by January 2024, said sources. Recently, the company announced a new section on its platform for users to view their credit bureau scores.

The company said users can use the section on the PhonePe app’s homepage, without any additional cost to manage their credit or Rupay cards, repay loans or pay credit card bills.

PhonePe is working with five lending partners, such as banks and non-banking financial companies (NBFCs), to build its lending business, said sources. It will work as a distributor for personal loans, as it slowly builds up credit underwriting heft, they added.

“PhonePe will start its consumer lending by January and will soon have multiple consumer (credit) products over the next six to seven months,” said the source requesting anonymity.

Currently, PhonePe distributes life, health, motor and car insurance with partners such as Acko, among others, and allows users to pay in monthly subscriptions through UPI. It also started merchant lending earlier this year, offering loans of up to ₹5 lakh to its merchant users.

While Groww has already launched consumer durable loans on its application, as well as merchant loans to begin with there are plans for home loans, personal loans and other credit products.

Although the the regulated entity does the final underwriting, providing a customer base with a high approval rate and strong potential for portfolio performance is crucial for fintechs in distribution, as it determines the quality of the partnership for lenders.

Recently, the Fintech Association for Consumer Empowerment (FACE), an industry body for digital lenders, in its eighth edition of FACETS report, stated that the association’s member companies disbursed loans amounting to ₹31,692 crore in the second quarter of financial year 2024 (Q2 FY24), a 43 per cent year-on-year (Y-o-Y) increase from ₹22,236 crore in Q2 FY23.