India’s lending market has witnessed 100 percent growth between FY17 to FY21 strongly led by growth in retail and microfinance segments, a report said on 31 August.
A report by CRIF High Mark, an Indian credit bureau, states that the Indian lending market as of March 2021 is at Rs 156.9 lakh crore. The report states that over the last five years segments like retail, microlending and commercial lending have grown by 91 percent, 157 percent and 93 percent respectively.
Out of the total lending share, retail and commercial contribute 49 percent each and microfinance constitutes 2 percent of the overall lending, the report said.
Retail Growth
According to the report, personal loan segment has grown nearly twice in origination by value and thrice by volumes and overall 40 percent reduction is witnessed in the ticket size of personal loans from Rs 2.4 lakh in FY17 to Rs 1.5 lakh in FY21. Banks continue to dominate the overall personal loan space whereas small ticket personal loans are dominated by NBFCs.
Further, private banks continued to dominate the credit cards space with 2.4x growth in new card origination from FY17 to FY20 followed by a drop in FY21 with average age of new borrowers less than 35 years and 18 percent are new-to-credit customers.
The Consumer durable segment was dominated by the NBFCs and witnessed a 2.5x growth in origination by value and 3x by volume from FY17 to FY20, followed by drop in FY21 due to COVID-19 pandemic.
Public sector banks and Housing Finance Companies dominated the overall housing loan segment, specifically the affordable housing loan. Overall home loans grew by 32 percent in terms of origination by value and 15 percent in terms of volume between from FY17 to FY20. The affordable housing segment witnessed 17 percent growth in originations by value and 6 percent growth in terms of volume, while a 16 percent increase was seen in the average ticket size from Rs 24.6 lakhs in FY17 to Rs 28 lakhs in FY21.
Microfinance
Loans in the microfinance category are dominated by banks and NBFC-MFIs. A 2.1x growth was witnessed in terms of origination by value in FY17-20 followed by a de-growth of 31 percent in FY21. The share of ticket size more than Rs 30,000 has increased by 38 percent from FY17-20.
Borrowers with exposure to two lenders have remained flat from March 2019 to March 2021 whereas a 10 percent increase was seen in proportion of exposure to 4 or more lenders in the same period.
Commercial Loans
MSME loans constitute a major segment of commercial loans in terms of volume by 85 percent. Public sector banks and private banks continue to dominate overall commercial and MSME loans.
MSME loans witnessed 13 percent growth in origination by value and 33 percent growth by volume from FY17 to FY20, followed by 62 percent growth in origination by volume from FY20 to FY21. The MSME borrower segment is captured as loans with credit exposure less than Rs 50 crore.
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