The gross non-performing assets (NPAs) in retail loans would rise to 4% over the next two years from 2.7% as of March 2007 as delinquencies across all retail asset categories have gone up and are likely to further increase in 2008-09, said Crisil, a subsidiary of rating international agency Standard & Poor?s on Tuesday.
According to Crisil?s managing director and CEO, Roopa Kudva, ?The sub-prime assets including small-ticket personal loans that are given to low-income customers, and a portion of credit card receivables are still relatively low at 7% of total outstanding retail loans. We estimate the loss levels in this segment to be currently at 7-9% and expect them to increase to 10-13% over the medium term. However, delinquencies across retail asset categories have gone up and are likely to increase in 2008-09.?
The housing loans constitute over half of the total retail loans in India. Gross NPAs in home loans increased to 2.2% in March 2007 from 1.8% in 2005. These are expected to increase to 2.7% in 2008-09. Car and commercial vehicle asset segments comprise one-third of total retail loans.
In 2008-09, these numbers are seen at 3% for car loans and 5.5% for commercial vehicles.
However, the situation will remain manageable because the less risky mortgage and vehicle loan segments continue to dominate the retail lending portfolio of lenders at 80% of total loans outstanding.
The increasing exposure to high-risk customers is mainly through personal loans and credit card receivables. These are unsecured in nature and now form 17% of total outstanding retail loans in March 2007, up from 6% in 2004.
Mortgage loans constitute around 51% of total retail advances (aggregate of banks, NBFCs, and housing finance companies (HFCs). Crisil estimates that small-ticket personal loans and credit cards receivables from borrowers with weak income levels constituted 30% of the total unsecured loans as on March 2007.