India consumer loans to be $1.2 tln by 2020: Credit Suisse

While the experience of the last consumer loan cycle (2004-07) was bitter, Credit Suisse believes that a number of structural changes in the market could allow for a steady, profitable growth in the next few years

January 14, 2015 / 13:26 IST

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India’s consumer finance market is expected to grow at a compounded rate of 18 percent and become a USD 1.2 trillion opportunity by 2020, says brokerage house Credit Suisse.

“While the experience of the last consumer loan cycle (2004-07) was bitter, we believe that a number of structural changes in the market could allow for a steady, profitable growth in the next few years. In addition, the expected fall in rates should spur growth in rate-sensitive segments such as mortgages and auto loans, ” said the Credit Suisse note to clients.

“While the market still remains underpenetrated (70 percent + of households have no liabilities of any sort), the organised players (banks + NBFCs) have developed diverse products targeted at all segments of the income pyramid, across multiple secured/unsecured loan types,” the note said.

Credit Suisse sees players with established track records across cycles and leadership positions as being best positioned to capture the expected growth in consumer lending.