Credit bureaus appear to be helping high-street banks take cautious lending decisions where loans are not backed by collaterals.Although personal loans, which are offered without any security, rose more than a quarter in the three months to September, delinquencies are still the lowest at 0.5 per cent, a study by credit bureau Transunion Cibil showed.
Steady rise in personal loan
Personal loan accounts of both banks and shadow banks combined rose to 15 million, showing a 26 per cent increase on-year. These are small-sized loans, in the range of Rs 1-5 lakh, and even their tenure is less than five years.
Delinquency rate going south
The study notes that the average balance per borrower is Rs 2.52 lakh, up 7.7 per cent over the previous year. The serious delinquency rate is 0.52 per cent, down one basis point over the previous year.Serious delinquency rates are measured as the percentage of balances that are 90 or more days past the due date.Significantly, the delinquency rate in personal loans or unsecured loans is the lowest among all retail loan products analysed in the study. Delinquency rate for loans against property is the highest at 3 per cent, followed by the auto loans segment which has a delinquency rate of 2.75 per cent.
“From a consumer perspective, it’s immensely important that borrowers understand the importance of continuing to make ontime payments,” said Yogendra Singh, vice president of Research and Consulting for TransUnion Cibil. “These emerging consumers are beginning to play a larger role in the Indian economy, and their ability to access and successfully manage credit will be critical to the future growth and health of the economy.”In the absence of demand from large corporate borrowers and also concerns of the assets turning bad, lenders have banked on retail loans to boost growth.(Text from Gayatri Nayak)