Atul Kriti
CRIF High Mark, a leading Indian credit bureau, launched the third edition of its How India Lends report today. The report deep dives into Consumptions Lending, MSME Lending, and Microfinance Lending for the last five years (FY20 to Q1 FY24) with an emphasis on key insights into the industry and consumer trends. Additionally, the report weighs in on the trends of last few years in comparison to pre-COVID-19 on the lending landscape.
Consumption Lending includes Home Loans, Personal Loans, Two-Wheeler Loans, Auto Loans, Consumer Durable Loans and Credit Cards. Entity MSME Loans are defined based on entity level credit exposure of upto ₹50 Crore. Corporate Loans refer to loans given to Mid and Large-size entities with credit exposure of more than ₹50 Crore and are reported to the Commercial Bureau. Individual MSME Loans include Business Loans (BL), Property Loans (LAP), Commercial Vehicle Loans (CVL) and Construction Equipment Loans (CEL).
In India, there are significant trends and patterns shaping major lending product categories. Let’s start by looking at Consumption Loans, which currently have a portfolio outstanding of ₹78 Lakh Cr as of June 2023.
When it comes to Home Loans, there has been a notable shift in originations from loan sizes ranging from ₹5L – ₹35L to ₹35L – ₹75L. Additionally, there has been a 22 percent growth in the average ticket size from ₹20.2L in FY20 to ₹24.7L in FY23.
Moving on to Personal Loans, there has been a remarkable 150% growth in originations by volume from FY20 to FY23. Notably, banks dominate in terms of origination value, while non-banking financial companies (NBFCs) lead in origination volume.
In the realm of Two-wheeler loans, there has been a 36% growth in originations by value from FY20 to FY23, along with substantial percentage growth in originations share for loans of ₹75K and above.
Auto Loans have seen a 63 percent growth in originations by value from FY20 to FY23. Moreover, there has been a shift in originations from smaller to larger ticket sizes, possibly due to an increase in vehicle prices during this time.
Consumer Durable Loans have experienced a 57 percent growth in originations by value and 51 percent growth by volume from FY20 to FY23. Notably, there is a consistent year-on-year increase in originations share for Private Banks in this category.
Credit Cards have witnessed a 69 percent growth in new cards issued from FY20 to FY23, with a notable increase in the share of Private Banks from FY22 onward.
Moving on to MSME Lending, the portfolio outstanding of Individual MSME Loans is currently at ₹28.5 Lakh Cr with a year-on-year growth of 13.5 percent. There has been an increase in the average ticket size for Individual MSME Loans from ₹5.8L in FY22 to ₹6.9L in FY23. Additionally, delinquency has improved across all Individual MSME Loans except for a specific category.
Entity MSME Loans have a portfolio outstanding of ₹26 Lakh Cr as of June 2023, with dominance by Private Banks in terms of value and Public Sector Banks in terms of volume. The micro segment has been the largest contributor to this category.
Microfinance Loans, with a portfolio outstanding of ₹355.3 K Cr, are dominated by NBFC MFIs in both value and volume, followed by Banks. Originations by value witnessed an 18% growth from FY20 to FY23, along with an increase in the average ticket size during the same period.
Lastly, Corporate Loans have a portfolio outstanding of ₹62.2 Lakh Cr as of June 2023, with a 33 percent growth in originations by value from FY22 to FY23.
