Unsecured retail loans grew at a CAGR (compounded annual growth rate) of 47 per cent from March 2021 to March 2023 led by digital and IToriented small ticket lending, reported Business Line quoting the TransUnion CIBIL’s Credit Market Indicator (CMI) report.
The report tracks credit market health via parameters including demand, supply, consumer behaviour and performance. The CMI for Q4 FY23 was at 102, up from 94 a year ago, further bolstering the upward trend in credit market activity since mid2021.
All credit products, barring mortgage loans, registered double digit growth in FY23,with outstanding advances for product categories rising 14 to 38 per cent YoY.
The slump in home loans was led by the affordable housing segment — home loans with sanction amount of less than ₹25 lakh — wherein the volume fell by 16 per cent and by value 15 per cent YoY.
Home loans of over ₹25 lakh rose one per cent by volume and 6 per cent by value.
Overall loan originations, or new accounts opened, remained buoyant, but approval rates fell YoY across categories as lenders turned cautious.
Approval rates for new-to-credit customers declined to 23 per cent in Q4 FY23 from 34 per cent as of March 2020.
Delinquencies, measured as 90 days past due or more, improved across categories except credit cards, which saw an increase of 66 bps to 2.94 per cent. Early (vintage) delinquency measured on loan originations for Q2 FY23, continued to remain stable for most products other than personal loans which rose to 4 per cent from 3 per cent a year ago.
Vintage delinquencies on small ticket loans increased to 8.9 per cent in Q2 FY23 from 8.6 per cent a quarter ago, whereas on high ticket personal loans fell to 3.7 per cent from 4.1 per cent.
Personal loans
Credit of over ₹50,000 comprise 98 per cent of the total personal loan book, whereas small-ticket loans comprise two per cent of personal loans and 0.3 per cent of retail loans at the industry level.
“Even though delinquencies on small ticket personal loans have a marginal impact on the personal loan portfolio, these need to be monitored closely, especially because consumers may have other payment obligations that may be prioritised,” it said.
