A district in Maharashtra offers encouraging signs for a pandemic-battered credit industry

Even as the credit industry struggles to grow in the wake of the pandemic, a district tucked away in western India is seeing a quick rebound in credit demand for most products.

Nashik, the sixth-largest credit market in Maharashtra, is clocking rapid growth in vehicle and home loans, as revealed by ICICI Securities analysts in a report.

Used vehicles are driving vehicle loans. “The key emerging trend is increased used-car financing volumes – as high as 2x of pre-Covid level and monthly disbursement being 20-30% higher than pre-Covid level,” the analysts said.

Better performance by the farm sector has improved demand for tractors and other commercial vehicles, again boosting credit. Private sector banks have been large players in this segment although non-bank lenders dominate this space.

Microfinance remains a laggard and the pain points revealed by the pandemic are yet to heal. Disbursements remain muted as lenders still prefer existing customers. The overall assets under management are Rs 800 crore for the district and the only silver lining is improvement in asset quality as collections get back to pre-Covid levels, the analysts said.

In the safest loan segment, home loans, the district has seen sharp growth. The affordable space has grown 15% in financial year 2021-22. Nashik’s share is 1.2-1.4% of the total disbursed throughout the country, the analysts added. But a bulk of the home loans have been made to self-employed individuals who are riskier than salaried individuals and require close monitoring.

Most loan segments in the district, which boasts a strong belt of small businesses, have shown improvement in growth and asset quality.