Mumbai: Young adults, under 25 years, utilizing low-term low-value credit, encouraging personal loans, which have grown 2.3 times with a value and 3.8 times with volume in terms of disbursement from FY21.
Many of these borrowers take loans for the first time with lenders assessing them using analytics and other digital assessment tools.
In the case of two wheels, 65% of the borrower is the first loan seeker, while it is 35% in the case they buy consumer durability such as refrigerators or washing machines on credit.
For lenders, especially non-banks, small it is beautiful with a personal size of a sharp shrinking loan even when the volume of this loan surge.
Between TA17 and FY21, the average ticket size of a personal loan shrank 40% to Rs 1.5 lakh from Rs 2.4 Lakh.
In the personal loan segment, a small personal loan (STPL – under Rs 1 Lakh), which is mostly driven by non-banking financing companies, has grown three times in terms of disbursement and more than 11 times the volume in the FY17 period to FY21.
This STPL borrower now accounts for half of all personal loan accounts in this country.
Crif High Mark’s credit bureau has conducted a comprehensive study, titled ‘How to Lends India’, captures market trends for five years.
“Landscaping credit in India continues to grow and has witnessed changes in consumer preferences, transferring demand for smaller ticket loans, ease of access to credit, increasing the use of digital platforms and the entry of non-traditional lenders in the ecosystem, to mention a little,” said Crif High Mark MD & CEO of Navin Chandani.
While lenders provide a small ticket loan at anger speed, this activity has not received much attention because the overall loan book has not grown much because this progress is a short and small-sized term.
The small personal loan portfolio with lenders has increased from RS 26,700 Crore in March 2019 to Rs 39,700 Crore in March 2020, growing 48% in one year.
An extraordinary loan grew only 3.6% to Rs 41,200 Crore at FY21.
While the loan portfolio value has subsided on FY21, in terms of the loan amount, the account has grown 19% to almost 2 crores.
Incidentally, it is a smaller borrower who faces more pressure in payment.
According to Crif High Mark, STPL loans have 8.8% of borrowers who cannot make payments in time (31-180 days) compared to 3.5% in a personal loan segment.
According to the report, the total size of the loan market in India in March this year stood at Rs 157 Lakh Crore.
From this retail and commercial account each 49%.
Microfinance contributes 2% balance.
Over the past five years, the retail loan portfolio, microlending and commercial has witnessed an increase of 91%, 157% and 93% respectively.
Even after the second wave of Covid, a personal loan continues to grow.
According to the maintenance ratings report, the growth rate of the retail / private loan segment reached 11.2% and higher by 220 basis points (100bps = 1 percentage point) in July this year compared to July 2020, the absolute credibility has increased from the hospital 25.7 lakh crore in July 2020 to Rs 28.6 lakh crore on July 2021.