As much as 34 lakh home loans totaling Rs 9 lakh crore were disbursed during the year ending December 2022 of which the less than Rs 25 lakh ticket size category accounted for the maximum number of disbursals, revealed a study on retail loans by Equifax and Andromeda.
Banks, housing finance companies, and other institutions provide home loans worth Rs 9 lakh crore during January 2022 and December 2022 period, registering an annual growth of 18%. The number of loans given too were up by 17% during calendar year 2022.
Overall portfolio outstanding of home loans grew by 16% from December 2021 to December 2022, said the study titled ‘Indian Retail Loans Overview-April 2023’.
It further revealed that the personal loan segment registered a growth of 57% during 2022. The market size of the retail industry reached Rs 100 lakh crore by December 2022, it added.
Among the different loan segments, the study said that on December 31, 2022 retail industry reported 54 crore active loans.
Furthermore, it added, as on December 31, 2022 there were 6.5 crore active consumer durable loans, registering an annual growth of 48% over the last year.
V Swaminathan, executive chairman, Andromeda Sales and Distributions, said, “Be it public sector banks, private sector banks or housing finance companies (HFCs), all are witnessing healthy growth in home loan business”.
Largest share of 0-25 lakh ticket size category
While the loans in 0-25 lakh ticket size category accounted for the 67% of disbursals, the disbursals increased by 36% in Rs 75 lakh- Rs 1 crore ticket size category in January-December 2022 compared to the preceding year. In 2021, the growth in the Rs 0-25 lakh category was also 67% over the year 2020.
The study showed that out of the overall portfolio outstanding of home loan which grew by 16% from December 2021 to December 2022, the private sector banks witnessed growth of 20% from December 2021 to December 2022 — Rs 5 lakh crore portfolio outstanding at the end of December 2022.
Observing that retail lending was badly affected during the pandemic, the report said, “it has bounced back by registering 40% annual growth from January 2022 to December 2022 over January 2021 to December 2021. Retail lenders disbursed 31 crore loans from January 2022 to December 2022.”
The report said personal loan witnessed a growth of 32% from December 2020 to December 2021 and 57% from December 2021 to December 2022.
Swaminathan added, “The rise in demand for personal loans in India can be attributed to multiple factors such as the growing consumption-driven demand, the ease of availing loans and the competitive landscape among lenders. Despite the recent RBI policy rate hikes, personal loan interest rates have not seen a similar increase compared to home loan rates.”
However, he underlined borrowers must exercise caution while availing personal loans, keeping in mind their repayment capacity and avoiding the pitfalls of debt traps.
K M Nanaiah, MD, Equifax Credit Information Services and country leader – India & MEA, Equifax, said, “The insights presented in our report will prove to be immensely beneficial for lenders as they aim to uphold high underwriting standards, manage risks prudently and increase operational efficiencies. Furthermore, the report will enable lenders to navigate the new high growth environment effectively by leveraging the knowledge gained from the pandemic.”
The contribution to retail loan disbursement was highest by the public sector banks and the private sector banks. However, the Non-Banking Financial Companies (NBFCs) witnessed a growth of 78% during January 2021 to December 2021 compared to January 2020 to December 2020. The private sector banks recorded a growth of 24% on an annual basis.
“NBFCs play a major role in the country’s financial system dominated by public and private sector banks. NBFCs are helping the much-required credit reach in every part of the country,” Swaminathan opined.
Besides a large number of branches, NBFCs are heavily deploying digital infrastructure and using App based technology for loan disbursals.
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