Share of new-to-credit consumers in originations drop to 12% in June, lowest ever

Credit

The share of new-to-credit (NTC) consumers in originations dropped to 12 percent in the June quarter, the lowest ever recorded by the TransUnion CIBIL for the segment, the credit information company said in a release on September 23. In the year ago, the share was 16 percent.

The share of originations for NTC consumers has declined consistently over the past five years, which indicates significant scope for lenders to drive access to credit opportunities for these customers, the release said.

Increasing NTC originations will also help lenders reduce concentration risk in their credit portfolios.

“Sustainable credit growth can be achieved by identifying and providing access to credit for these New-to-Credit consumers using information analytics and technology-based solutions,” TransUnion CIBIL managing director and chief executive officer Rajesh Kumar was quoted as saying in the release.

Originations growth among consumption-led credit products, including personal loans, moderated in the June quarter, the release said.

Overall originations continued to grow at a moderated rate. Home loan originations dropped 9 percent in volume, while credit card declined by 30 percent on-year. Two-wheeler loans were the only product, which had a double-digit growth in volume and value originated, the release said.

According to the report, approval rate by existing to credit declined to 19 percent from the year-ago period and 26 percent in June 2022.

Approval rate of NTC declined to 19 percent  as against 24 percent in June 2023 and 25 percent in the year before.

India’s retail credit growth moderated in the quarter as financial institutions tightened the supply, particularly for consumption-led products such as credit cards, consumer durable loans and personal loans.

The balance level delinquencies of credit cards increased by 17 basis points to 1.8 percent, the report said.