MUMBAI: Retail credit slowed down in the second quarter of FY24, data from TransUnion Cibil showed. There has also been a marked increase in defaults in personal loans and credit cards during the same time period.
This deceleration in retail loan growth stems from a lack of growth in home loan disbursements during the period, due to a drop in originations in the sub-Rs 35 lakh affordable housing category.
During the quarter ending Sept 2023, home loans witnessed a 9% increase in value compared to the year-ago period. However, the volume of low-value home loans (below Rs 35 lakhs) – constituting 76% of originations – declined by 4%, impacting the overall growth in new home loans.
In contrast, home loans valued at Rs 75 lakhs and above, which formed 7% of the total origination volume, experienced a significant 23% year-on-year growth. This shift in loan ticket sizes correlates with the upward trajectory of property prices in 2023.
According to Cibil data, loan delinquencies worsened in the credit card and personal loan sectors but improved in all other categories. Delinquencies in credit cards surged by 23 basis points (100 bps =1%) to 1.7%, while delayed payments on personal loans increased by 10% to 0.9% of the loan portfolio.
Overall, serious delinquencies at the balance level (defined as 90 days or more past due) continued to improve across product categories, except for a slight deterioration in credit cards and personal loans. This improvement is reflected in the CMI indicator for consumer performance, which rose by 11 points from 90 in Sept 2022 to 101 in Sept 2023.
Despite a 27% year-on-year growth in outstanding balances for personal loans, their overall share in the retail credit portfolio saw a marginal increase of 20 bps.
“Opportunities for growth in India’s credit sector are abundant with emerging young consumers, untapped new-to-credit consumers, as well as growth in rural and semi-urban consumer bases. To tap into these opportunities, lenders must identify deserving consumers and facilitate access to credit for them,” said Rajesh Kumar, MD & CEO, TransUnion Cibil.
“Simultaneously, lenders must continue to prioritise strong underwriting practices and regular, nuanced monitoring of consumer behaviour to drive sustained credit growth and profitability.”

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