The economic decline due to the COVID-19 crisis has had an adverse impact across the FinTech sector in India, and not being immune to this impact leads to the effects. India’s economic growth has contracted at the beginning phase of lock-down in near Q1 and Q2 of 2020. We have also observed that Lending activity has been impacted severely in Q1 and Q2 of 2020, but some revival was seen in May 2020 at the first phase of unlocking.
Phase From Breakdown To Revival
We all observed liquidity crunches in businesses. Small businesses found it very difficult to abide by operations. The social distancing phases had been implemented to curb the spread of the disease, which led to having reduced consumption, thereby affecting the businesses and FinTech industry as a whole.
Now that we have moved towards Unlocking, there is an improvement in the revival of the consumptions and the loan needs by businesses. It is leading growth for the Peer-to-peer lending sector. According to the TransUnion CIBIL Retail Credit Outlook report, it states that the money supply year-on-year growth had dropped to 10% in Q2 2020 from 12.5% in Q4 2019. But the fall is slowly seen moving upwards in Q3 2020 and gradually getting back to 12.5% in Q1 2021. India is entering the festival season, which started in August. Now, it’s a time that India’s consumption and demand will move north from its bottom in Q1. We expect that Q3 will remain as a bridge to return back to India’s high growth phase.
The P2P lending sector has no doubt quickly adjusted and adapted to the trials and tribulations of the COVID-19 pandemic. Now, it’s the other side of the coin ruling the game. This quarter is expected to be good for the sector and LenDenClub.