The digital lending balancing act

The Indian digital lending landscape witnessed a flurry of cascading developments in the past two weeks. With falling household savings and an unprecedented rise in retail loan disbursement, the Reserve Bank of India increased the risk weightage on unsecured retail loans. This was soon followed by banks and large NBFCs asking their on-lending partners to go slow on new retail lending while, at the same time, a prominent fintech player announced they were cutting down their retail loan portfolio. Amidst this, the news of the closure of a big BNPL player has created some caution in the industry. However, there continues to be a demand for digital loans, with more than 53% of all loans disbursed by NBFCs being done through digital means,