Code to Credit: Digital Lending Thesis (Eximius Ventures)

Summary

• The Indian economy is projected to reach $5 trillion by 2027, facing an estimated $1 trillion credit gap across individuals and businesses.p.8
• Digital lending in India is anticipated to grow to $400 billion by 2024, contributing 55% of the overall FinTech sector.p.9
• Over 500 million new-to-credit (NTC) individuals in India currently lack complete financial inclusion.p.10
• The digital lending market in India is projected to reach $593 billion by FY26, up from $270 billion in FY22.p.11
• Non-performing assets (NPAs) for Indian banks are projected by S&P Global to drop to 4.5% in FY2023-24 and 3.5% in FY2024-25.p.16
• In 2023, lending tech accounted for 60% of all venture capital and private equity funding in the Indian FinTech sector.p.25

Key insights

1. India's credit-to-GDP ratio remains conservative at 50%, leaving a substantial credit gap that physical institutions alone cannot address.p.6
2. The MSME market in India has an untapped credit need of $400 billion, with only 14% having capitalized on formal credit to date.p.10
3. FinTechs outperform traditional private lenders in onboarding NTC borrowers, successfully transitioning over 50% of them to credit scores above 700.p.10
4. Female participation in new credit uptake in India grew from 32% in 2017 to 34% in 2022.p.13
5. India's bank co-lending portfolio reached $3.04 billion in FY23, quadrupling its value from FY22.p.39
6. Generative AI applications in lending can streamline underwriting, predict payment behaviors for collections, and automate customer onboarding.p.22