Navigating Credit: A Thesis on Indian Lending Infrastructure (Eximius Ventures)

Summary

• The Indian digital lending market's growth has been led by unsecured lending, which grew by 28.1% in 2023, while secured digital lending grew by 11.5%.p.7
• India's bank co-lending portfolio reached $3.04 billion in FY23, quadrupling from FY22.p.8
• Lenders face key challenges in Loan Management Systems (LMS), with 58% citing product configuration issues and 54% citing long time-to-market for new products.p.10
• Digital communication failure remains a major bottleneck in debt recovery, as only 4% of debtors are reached on the first contact attempt.p.16
• Over 1,351 banks are live on eNach in India, supporting automated debt collection workflows.p.16
• Indian credit card penetration stands at 3% compared to 30% in the United States, indicating significant growth potential.p.22

Key insights

1. Adoption of self-service portals among financial services users grew by 5.4x in 2023.p.11
2. Digital lending in India faces a 4.2% delinquency rate, primarily driven by micro-loans and the new-to-credit (NTC) segment.p.17
3. Using generative AI chatbots in banking led to an estimated $7.3 billion in cost savings in 2023.p.17
4. Credit card linkage with UPI recorded 1 billion transactions in early 2024, unlocking new merchant acceptance and transaction use cases.p.22
5. The gold loan market in India is valued at $6 trillion, with 65% of the market remaining unorganised.p.27