Personal loans and home loans dominated festive loans: report

Personal loans eclipsed all other products in witnessing almost 2X growth in creations (value) during the holiday season.

According to a report by CRIF High Mark titled “How India Celebrates – Festive Loans in India Report”, personal loans outperformed all other types of products.

From Rs 75,088 crore in FY19 to Rs 147,236 crore in FY22, personal lending increased issuance (volume) by 4 times from 39.9 lakh accounts in FY22. FY19 accounts to 158.1 lakh in FY22.

The report highlights the general trends and development of major consumer loan products such as personal, residential, durable, two-wheeler and auto loans during the festive season – Q3 every year (October – December), from FY19 to FY22. The holiday season is defined as the third quarter of the fiscal year (Oct-Nov-Dec).

Home loans, on the other hand, saw 40% growth in originations (value) during the festive season, rising from Rs 138,544 crore in FY19 to Rs 193,227 crore in FY19. FY22, and a 21% growth in creations (volume) from 6.7 lakh accounts in FY19 to 8.1 lakh accounts in FY22.

The company says the main trend to note is that Q3 share of origins (value) increased from FY19 to FY21 for all products. However, the report indicates that personal loans and home loans outperform 4 years.

Performance of main loan products

Below are the main trends observed in the main consumer credit products – personal loans, housing, consumer durables, two-wheelers and automobiles –

  • Personal loans grew nearly 2x its value in FY22 and grew 4x from FY19 to FY22. There was an increase in the origination (value) share of public sector banks and NBFCs between the third quarter of FY19 and FY22. Private banks experienced a decline over the same period .

However, the report indicates that public sector banks have seen their share of origination (volume) decline, while private banks and NBFCs have seen an increase over the same period.

  • Real estate loans: The report indicates that there was an increase in the origination share (both in value and volume) of private banks from the third quarter of FY2019 to FY22, while banks in the sector public and HFCs have seen a decline over the same period.
  • Sustainable consumer loans achieved 32% growth in value from Rs 19,683 crore in FY19 to Rs 26,075 crore in FY22, the report says and a 33% growth in creations ( volume) from 91.6 lakh accounts in FY19 to 121.9 lakh accounts in FY22.

There was an increase in origination share (both in value and volume) of private banks from the third quarter of FY2019 to FY22, and even though the category is dominated by NBFCs, their share has decreased.

  • Two-wheeled loans saw stable growth in creations (value) from Rs 16,393 crore in FY19 to Rs 15,281 crore in FY22 and a 29% drop in creations (volume) from 28.7 lakh accounts in Q3 FY19 at 20.4 lakh accounts to Q3 FY22.

There was a decline in origination share (both in value and volume) from Private Banks and NBFC – Captives during the holiday season. NBFC – Others have seen growth over the same period.

  • Car loans saw stable origination (value) growth from Rs 54,367 crore during FY19 to Rs 56,420 crore during FY22. Creations (volume) in Q3 FY19, Q3 FY20 and Q3 FY21 remained above 10 lakh accounts. However, in the third quarter of FY22, it fell to 8 lakh accounts.

The report showed that there was an increase in origination share (both in value and volume) of public sector banks and private banks from the third quarter of FY2019 to FY22, while that NBFCs have seen a decline.

Navin Chandani, MD and CEO of CRIF High Mark, says, “The report, How India Celebrates – Report on Festive Lending in India, has been compiled to capture key trends and developments in major consumer lending products. Our data from FY19 to FY22 shows that the lending industry is driven by strong demand for major consumer products during the holiday season; this continues to be the preferred time to make large, high-value purchases.

He further adds, “The insights will help all key players in the consumer industry to capitalize on the strong consumer demand during the holiday season in an improved way and create a collaborative ecosystem, which will boost the lending community in its whole”.

South and West India dominate origin

According to the report, South and West India dominate origins. Among the top 10 states, origins (value) are highest in Maharashtra for car, personal, consumer durables and real estate loans, and in Uttar Pradesh for two-wheeler loans.

Of the top 15 districts, most are in the south and west of the country, with Jaipur, NCR and Kolkata being the exceptions. Origins (value) are highest in Bangalore for all products, with home loans and personal loans dominating, followed by car loans and consumer durable loans.