The report estimates that nearly 108 million retail loan accounts are estimated to be added annually for the next five years.
Financing has always been a popular option to own consumer goods, buy vehicles or even for creating assets such as a home. And, if you think that not many are looking out for loans, here is some data to look at. Nearly 108 million retail loan accounts are estimated to be added annually for the next five years. Even now, individuals going for retail loans such as home loans, car loans, and personal loans are not a small number. According to estimates, on an average 60 million retail loan accounts are added annually in the country.
With growth on the cards, it is expected the retail individuals will also get a fair deal due to intense competition among the market players. Anup Bagchi, Executive Director, ICICI Bank thinks that there could be lower costs for customers due to intensifying competition. According to an ICICI Bank report powered by CRISIL, ‘Mining the Golden Opportunity in Retail Loans’, Retail loan book of financiers in India will double to Rs. 96 trillion by March 2024, compared with Rs. 48 trillion in March 2019.
The report finds out that loan accounts for consumer durables, two-wheelers, personal loans and credit cards will contribute the maximum to volumes that will be added annually. Together, they will add an estimated 96 million accounts annually. Of the above, around 53 million loans is projected to be disbursed annually for consumer durables itself. Further, on average, an additional 4.5 million housing units are likely to be funded annually for the next five years.
According to the key highlights of the report, the main segment contributors for the growth are as follows:
- Mortgage loans market—normal and low cost housing and loan against property—is expected to double to Rs. 46.1 trillion in FY24
- Unsecured loans — personal loans and credit cards—to more than double to Rs. 13.8 trillion in FY24
- Loans to MSMEs are likely to more than double to Rs. 13.2 trillion
- Vehicles—commercial vehicle, four and two-wheeler—loans are tipped to nearly double to Rs. 17.5 trillion
The report predicts that this rapid growth will take place in the next five years on the back of increased demand for private consumption (namely home, car, consumer durables, credit cards etc), willingness of consumers to take loans, increased availability of various consumer data, improved usage of data analytics and regulatory initiatives propelling growth in low-cost housing loans and MSME (Micro, Small & Medium Enterprises) loans.
No matter which loan one goes for, it is essential to prepay it as early as possible. This helps to keep the interest cost low. Also, make sure all the EMI’s are paid back on time and no default occurs so to keep the credit profile and credit score high.