The Indian lending market witnessed a very healthy growth of almost 100 per cent, as per a report by the credit bureau CRIF High Mark.
As per a report titled 'How India Lends-FY 2021', the total size of the Indian lending market during the last fiscal, ending March 2021, is Rs 156.9 lakh crore—a 100 per cent growth from FY 2017 to FY 2021. The report observed that over the last five years, retail, micro and commercial lending portfolios had witnessed very healthy growth. Besides, retail and commercial lending also contributed handsomely to the total lending space in India.
The report further stated that the overall personal loans portfolio witnessed 2.3 times growth in originations by value and 3.8 times by volume from FY17 to FY21 while the same for the small ticket personal loans was three times growth in originations by value and 11.5 times by volume. The report also pointed out that credit cards also witnessed positive growth in new card originations from FY 2017 to FY 2020 followed by a drop in FY 2021. Besides, the two wheeler loan books and auto loans also saw growth both by value and volume. The home loans portfolio too witnessed 32 per cent growth in originations by value and 15 per cent by volume. Affordable home loans grew by 17 per cent in originations by value and six per cent by volume. Business loans too witnessed healthy growth during the period.
The report observed that the period from FY 2017 to FY21 can be broadly characterised by the growth of small ticket retail loans as was evident by flat growth of average balances per borrower despite two-fold increase in active retail loans. As per the report among home loans, affordable loans with a ticket size of less than Rs 35 lakhs is an important component of the home loans market. Public Sector Banks (PSBs) and Housing Finance Companies dominate the overall home Loans as well as affordable home Loans segment.
As per the report the auto loans are dominated by private and public sector banks and NBFCs. Auto loans in the country witnessed growth in originations by value from FY17 to FY19 followed by a de-growth in FY20 and FY21 with 17 percent growth in average ticket size from FY2017 to FY21. The business loan category was dominated by PSBs and NBFCs. The report observed that under the commercial loans segment, the MSME loans (entry level exposure upto Rs 50 crore) is an important component of the commercial loans market contributing 85 per cent by volume as of March 2021. PSBs as well as private banks dominated both the overall commercial loans and MSME Loans. MSME loans witnessed 13 per cent growth in originations by value and 33 per cent growth in originations by volume from FY17 to FY20, followed by 62 per cent growth in originations (by volume) from FY 2020 to FY21.
As per the report in the personal loans segment, the PSBs with 43 per cent share and private banks with 37.4 per cent share dominated the segment. However, in the small ticket personal loans, NBFCs dominate the market in India with a share of 28.8 per cent by value and 65.7 per cent by volume. Another interesting fact in the report is that in the credit card business is dominated by private banks in the country both in terms of value and volume. From FY 2017 to FY 2020 there was growth of 2.4 times in the number of new cards issued, followed by a 36 per cent year on year drop in FY21. In FY 2021, 54 per cent of the new credit cards that were issued had borrowers with age less than 35 years.
In the Peer to Peer (P2P) lending space there has been an uptake of business. “P2P lending is seeing traction on the upward side. Stock market returns in the last two years have been a factor for decline in the count of investors as its liquidity and higher returns are more than P2P lending format. Recently we have observed a class of investors identifying it as a different asset class and soon we can experience a surge in investor lending. We may expect the P2P market bouncing back to normal pre-COVID-19 times in a couple of months,” said Rajiv M. Ranjan, founder and CMD of PaisaDukan.com.
