Credit growth is crucial but requires cautious management, say fintech entrepreneurs

Credit growth is essential to drive the next phase of India's economic expansion, and there's more room for credit to grow, said Pine Labs Founder Amrish Rau. However, it must be managed responsibly to avoid potential pitfalls, cautioned Peak XV's Managing Director Shailendra Singh.

"I believe that Indian consumer hasn't really adopted to credit to help personal growth, economic growth, personal growth, consumption growth ... And as we start to see Indian consumer use credit to better their own lives and the ecosystem around them, I think the Indian economy will benefit," said Rau, during a panel discussion on the future of fintech at the Global Fintech Fest in Mumbai.

However, PeakXV's Singh believes that credit growth must be approached with caution.

"As we have seen recently, people get credit and then do real money gaming—that's pretty scary. People are using credit to do futures and options online. That's pretty scary. We don't want people falling into a consumption trap like in certain parts of the world," he said.

During FY23-24, fintech and digital lending firms in India processed and sanctioned over 10 crore loans, with total disbursements amounting to Rs 1,46,517 crore, according to a report by the Fintech Association for Consumer Empowerment (FACE) released in June this year.

The report noted a year-on-year growth of 35% in disbursement volume and 49% in disbursement value. The average loan size during this period was Rs 12,648, compared with Rs 11,094 in the previous year.

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In the fourth quarter of FY23-24, member companies disbursed 2.69 crore loans worth Rs 40,322 crore, with an average loan size of Rs 13,418. This represents a 3% growth over the third quarter of FY23-24, FACE reported.

Dilip Asbe, MD and CEO of National Payments Corporation of India (NPCI), believes that a UPI-like ecosystem can be the solution.

"The way payments have transformed, I think the credit has to transform all by itself, using UPI," said Asbe.

He remarked that the main hurdle with ramping up credit responsibly, collections, can be made easier through an end-to-end life cycle product where banks have more control over the loans being disbursed.

Fintech requires planning and precision

Singh also emphasised that fintech is fundamentally a business of precision, not speed. In his view, many tech founders who venture into financial services often misapply the principles of technology startups—such as rapid scaling and aggressive fundraising—to a domain that requires meticulous attention to detail and careful planning.

Financial services are inherently different from traditional tech industries; they require a multi-decade horizon for growth and stability. Unlike the "winner-takes-all" dynamics often seen in the tech industry, the fintech sector operates under stringent regulatory oversight, fostering a diverse market with multiple participants. This ensures that consumers, merchants, and other stakeholders are well-served through healthy competition, said Singh.

He also argued that fintech companies should avoid the pitfalls of blitz scaling and instead focus on building thoughtfully with balanced strategies. According to him, the key to success lies in developing a precise and compelling value proposition, supported by strong underwriting discipline, sharp execution, and a relentless focus on quality over quantity.