Retail loan growth, especially originations, showed moderation on a year-on-year (Y-o-Y) basis in the quarter ended September 2023 as lenders tightened the flow of money to segments like credit cards and personal loans, which showed a rise in delinquencies, according to CIBIL’s Credit Market Indicator (CMI) report.
The growth in origination in personal loans declined to 28 per cent in September 2023 from 72 per cent a year ago, and for credit cards, it dipped to five per cent from 74 per cent. For housing, it declined to zero per cent from 13 per cent a year ago. Loan origination is the process by which lenders assess and clear borrower applications for different kinds of loans.
The share of new-to-credit (NTC) consumers in originations also dropped from 17 per cent in the quarter ending September 2022 to 14 per cent in the quarter ended September 2023. The decline in origination volumes for new-to-credit consumers is detrimental to the development of consumer segments youth, women, and consumers in the semi-urban and rural geographies typically make up a larger share of first-time credit seekers.
The increased access to credit opportunities has a direct correlation to improvement in the quality of life and financial empowerment of these consumers, who are the drivers of the country’s economic engine, the credit information bureau said.
CIBIL Credit Market Indicator (CMI)* report showed that the reading for September 2023 was 103, which was four points higher than September 2022 and continues the rising trend from a low of 88 in September 2021.
Rajesh Kumar, the Managing Director and Chief Executive, TransUnion CIBIL, said: “The latest CMI indicates continued stability in the Indian consumer credit market, as credit institutions aligned and responded effectively to the market trends over the last year. This stability now provides a strong bedrock for driving balanced and sustained credit growth across products.
The CMI is a comprehensive measure of data to analyse changes in credit market health, categorized under four pillars: demand, supply, consumer behaviour, and performance.
Intensive monitoring of portfolios, while also finding and funding the lower-risk consumers who deserve financial opportunities for fulfilling their aspirations, can set India’s credit industry on the path for long-term growth,” he added.
First Published: Feb 06 2024 | 6:27 PM IST