‘Impressive growth’ in personal retail loans shows revival in consumption, overall economic sentiment – Report

An ‘impressive growth’ of 42 per cent in personal retail loans from March 2021 to March 2022 indicates a revival in consumption and improvement in overall economic and business sentiment. Per a study by Equifax and Andromeda, the number of active personal loans increased from 3.5 crore as of March 2020 to 4 crore by March 2021, and increased again to 6 crores by March 2022. “The retail loans portfolio segment of the Indian lending industry has shown double-digit growth, with personal loan disbursements specifically recording significant growth. This is a strong indicator of the revival in consumption in the country,” said KM Nanaiah, Managing Director, Equifax Credit Information Services.

The book size of personal loans increased from Rs 5 lakh crore in March 2020 to Rs 6 lakh crore in March 2021 and rose again to Rs 8 lakh crore in March 2022. These loans were mostly disbursed by NBFCs, followed by private banks. While the private banks registered highest growth of portfolio outstanding with a 32 per cent increase from March 2020 to March 2022, the public sector recorded a growth of portfolio outstanding with a 21 per cent increase during the period, and for NBFCs, the growth was 7 per cent from March 2020 to 2021 and a 13 per cent from March 2021 to March 2022.

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Raoul Kapoor, Co CEO, Andromeda Sales and Distribution Pvt Ltd, said, “If the trend in the growth of personal loans sustains, we can safely assume the economy will do well in the coming years. At the same time, we must keep in mind interest rates are on the rise. Additionally, there is no let up in the geopolitical tensions, and these two factors will certainly weigh on the minds of consumers.”

The retail industry witnessed 46 crore active loans as of March 2022, which increased by 46 per cent from March 2021 to March 2022, Kisan credit cards rose by 15 per cent and credit cards by 13 per cent during the same time period. In the total portfolio outstanding of the retail industry as of March 2020, 50 per cent was being contributed by the top five sectors: housing loans, personal loans, property loans, gold loans and auto loans.

In terms of housing loans, as of March 2022, the portfolio outstanding was Rs 26 lakh crore and it grew by 11 per cent from March 2020 to March 2021 and again by 12 per cent from March 2021 to March 2022. In terms of personal loan, the portfolio outstanding grew by 23 per cent fromMarch 2021 to March 2022.