Trends of Personal Loans Market in India

Over the past decade, the banking landscape in India has undergone a remarkable transformation, greatly impacting the borrowing behavior of its citizens. As a leading financial institution, Hero FinCorp has played a pivotal role in driving this change, particularly in the Personal Loan segment. From digital advancements to shifting consumer preferences, several factors have reshaped the lending landscape, transforming this exciting market.  This article explores the evolving trends and factors that have influenced Indian consumers, shedding light on the ongoing growth of the Personal Loan market size in India.

Why Personal Loans Are So Popular in India

Easy availability has led to the immense growth of the Personal Loan market in India. Even in 2023, the growth is expected to continue. Thanks to competitive interest rates, no collateral requirement and flexible repayment tenures, Personal Loans have become the preferred choice of salaried as well as self-employed professionals. Furthermore, the minimum income requirement for Personal Loan is Rs 15,000 only, which makes it accessible to person as young as 21 years.

Trends That Are Turning in to Game-Changers in the Personal Loan Market:

Newer trends in the Personal Loan market are changing the financial landscape in India. With the growing popularity of digital finance, quick approvals, minimal documentation, and exceptional customer service, Personal Loans have become more accessible. 

• Rising Competition in the Lending Market 

As the Personal Loan market in India continues to flourish, rising competition among lenders has become a significant driving force. All this has resulted in enhanced loan offerings, competitive interest rates, and improved customer-centric approaches, ultimately benefiting the borrowers.

• Digitisation of Personal Loan Business 

The digitisation of the Personal Loan Industry in India is reshaping the landscape. Hero FinCorp Loan app is an example of this. Using our mobile app, borrowers can conveniently apply for loans, submit documentation digitally, and enjoy a streamlined loan approval process, making Personal Loans more accessible and efficient than ever before.

• Increasing Flexibility in EMIs 

The increasing flexibility in EMIs offers more options to borrowers. At Hero FinCorp, we provide the added advantage of a five-year tenure, enabling individuals to choose a repayment plan that suits their financial circumstances and goals.  

• Repayment Modes 

Your way of repaying loan EMIs is crucial for a good Personal Loan experience. At Hero FinCorp, we understand this, and offer borrowers a range of convenient repayment options. Whether it is through online transfers, automated payments, or standing instructions, we ensure a hassle-free repayment process that aligns with the diverse needs and preferences of our customers.

• Attractive Interest Rates -

One of the primary reasons behind the increasing popularity of Personal Loans in India is the availability of low interest rates. At Hero FinCorp, we prioritise offering competitive rates, ensuring our customers have access to affordable borrowing options. With our low interest rate Personal Loans, we aim to empower individuals to fulfil their financial goals without straining their budgets.

• Credit Score System - 

The credit score system plays a significant role in accessing financial opportunities. With Personal Loans, borrowers have an excellent opportunity to build a strong credit score. At Hero FinCorp, we understand the importance of creditworthiness, and by responsibly repaying Personal Loans, individuals can establish and improve their credit history, paving the way for future financial endeavours and unlocking greater possibilities.

• Online Lending Platforms - 

We leverage technology to provide instant Personal Loans, ensuring a seamless borrowing experience. Our user-friendly online platform allows you to conveniently apply for a loan, submit documentation digitally, and receive quick approvals.

• Minimal Documentation 

With basic Know Your Customer (KYC) information, we ensure a streamlined experience for our borrowers. By simplifying the documentation process, we aim to make Personal Loan applications more convenient, saving our customers valuable time and effort.

• Used for Any Purpose 

When it comes to Personal Loans, the versatility they offer is unparalleled. At Hero FinCorp, we provide Personal Loans that can be used for any purpose, whether it is funding a wedding, home renovation, education, or medical expenses. Our goal is to empower individuals to achieve their goals and dreams, offering the financial flexibility they need.

• Debt Consolidation 

Dealing with multiple debts can be troublesome. With Personal Loans combining multiple debts into a single loan can simplify your finances. It helps you streamline repayments and save on interest costs. 

• No Collateral Required 

Unlike secured loans, our Personal Loans do not require collateral. Our collateral-free Personal Loans are accessible to individuals based on their creditworthiness and repayment capacity.

• Processing Time 

When you need funds urgently, time is of the essence. Our efficient processing for Personal Loan approvals provide swift loan approvals, ensuring you receive the funds you need. We value your time and aim to make the loan application process as quick and convenient as possible.

• Personal Line of Credit 

A Personal Loan is a borrowing option that gives access to funds as per each person’s requirements. This is how we offer financial flexibility and convenience for various needs, be it emergencies or planned expenses.

India Personal Loan Market by Share

The India Personal Loan market, segmented by lending institutions and NBFCs, tenure, purpose, and interest rate. These factors drive market dynamics, indicating the evolving preferences and demands of borrowers in the forecast period till 2025.
 

Loan Type	Share (%)
Credit Cards	17.2
Personal Loans	14.1
Agri Loans	11.8
Consumer Durable Loans	11.3
Gold Loans	11.0
Home Loans	3.3
Auto Loans	2.9

 

Conclusion

The Indian Personal Loan market is undergoing significant transformations, and the factors driving this include digitisation, rising competition, and attractive interest rates. The market is witnessing a shift in loan preferences. As the market is evolving, lenders are adapting to changing borrower needs, offering flexible repayment options, demanding minimal documentation, and ensuring faster processing times. With forecasted opportunities on the horizon, the Personal Loan market in India is poised for continued growth and innovation in the coming years.

FAQ:

1. How Big is the Lending Market in India?
The lending market in India presents a significant opportunity, with an estimated value of Rs 12 trillion. The Praxis report suggests that digital lending has the potential to offer an even more substantial opportunity of approximately Rs 104 trillion by 2030.

2. How many Personal Loan Accounts are there in India?
In India, the number of Personal Loan accounts has witnessed significant growth, reaching nearly 2 Crore. This indicates a 19% increase in the number of loans, despite a slight easing in the value of the loan portfolio during FY21.

3. How many Indians have Credit Score?
According to TransUnion CIBIL research, the number of Indians with a credit score has seen a substantial increase. It grew from 91 million in 2017 to 179 million in 2021, covering an estimated 22% of the adult population. This indicates a significant rise in the number of individuals in India with a credit score.