Overall demand for credit slumped by 31 per cent since November 8 when the government announced demonetisation. Consumer loan demand for two-wheeler and consumer durable dropped by 43 and 60 per cent, respectively, since note ban, says credit rating agency TransUnion CIBIL.
Demand for credit cards and automobile loans, however, recovered in December from a sharp decline in the early weeks of demonetisation, according to TransUnion CIBIL which analysed the changes in credit demand based on the number of individuals applying for credit. Credit demand was growing at an average 35 per cent on an annual basis across all loan products in 2016 prior to November 8.
“In the week after the demonetisation announcement, we saw a significant decrease in new credit demand, with the focus for both consumers and bankers being cash exchange and collections” said Amrita Mitra, vice president-financial services research and consulting at TransUnion CIBIL.
“Two-wheeler and consumer durable loans, usually serviced by private banks and NBFCs, were most negatively impacted—significantly in key geographies like Maharashtra, Gujarat, Andhra Pradesh & West Bengal,” she added.
The agency’s analysis of the risk profiles showed no material deterioration in the credit quality of new loan applicants, implying that the drop in demand was broad based across all consumers rather than disproportionately impacting specific consumer segments.
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