In the last two years, unsecured loans in India have grown faster than secured loans. Indian households are leveling up as the number of loans per person is on a rise. The average personal loans have also risen, Macquarie said in a report title 'India Financials - Sand Sifting'.
While the household debt has shot up, the income level seems to have stagnated over last few years, according to the report.
Personal loans have seen a jump up of 60 percent in ticket size in last four years. In comparison, consumer durable loans fell 50 percent in the same period.
According to a study by the Boston Consulting Group, retail customers are increasingly shrinking the potential new customers pool.
Nearly 40 percent of the customers who availed a new loan in 2017, had two or more loans already pending with 30 percent of them having outstanding balance of Rs 1 lakh on existing loans.
Beside personal loans, home loans and auto loans have also seen an increase in the ticket size by nearly 19-25 percent, the report said.
In 2017, number of borrowers less than 35 years of age has risen to 40 percent as compared to just 24 percent in 2013. Customers, in the below-25 years category, have increased three times to 9 percent in current year from 3 percent in 2013.
This means customers below 25 years of age are leveraging up faster than the previous generations.
The report further says enquiries about loans and credit has also shot up. In last four years, the request from borrowers has nearly tripled.
Looking at the situation, banks have been careful to not grow 'new-to-bank' customers aggressively. Unsecured loans too are mostly restricted to existing customers to reduce chances of default.
This means that banks are scouting for right customers to lend to. Numerous credit bureaus are helping with credit history and ratings of the borrowers.
The overall story of retail outpacing corporate loan growth continues. With the upcoming 2019 general elections, it is unlikely the companies will hike capital expenditure.
According to the report, sectors like oil & gas, auto, auto ancillaries could see some investments over the next two years.
"Takeovers of large stressed steel assets under the IBC proceedings could delay the investments further," it said.