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Credit uptake on path of recovery as India rebounds from Covid-19: BankBazaar report

According to BankBazaar Moneymood 2021 report, 2020 started on a promising note, with recession of 2019 beginning to ease off in the first quarter (Q1) of the calendar. However, the Covid-19 pandemic brought regular life to a grinding halt towards the end of March.

By: Express Web Desk | New Delhi | Updated: December 18, 2020 7:33:11 pm
Indian one thousand and five hundred rupee banknotes are arranged for a photograph in Mumbai, India, on Sunday, Jan. 29, 2016. (Photographer: Dhiraj Singh/Bloomberg)

Despite very lean months during the lockdown the combination of economic revival and safe access to credit through digital KYC is pushing credit uptake to trend towards 80 per cent of pre-Covid numbers, a report by online financial product marketplace BankBazaar has claimed.

According to BankBazaar Moneymood 2021 report, 2020 started on a promising note, with recession of 2019 beginning to ease off in the first quarter (Q1) of the calendar. However, the Covid-19 pandemic brought regular life to a grinding halt towards the end of March. “Consequently, priorities have changed, and it is evident that people are evaluating their spends and investments very closely,” it said noting that every quarter of 2020 had a different story of resilience.

The BankBazaar report further says that investments in assets such as homes were the biggest casualty as people turned wary of spending and set aside major capital investments for later. However, continuance of Pradhan Mantri Awas Yojana (PMAY) benefits, choice inventory, slashed registration costs in some places, and record low interest rates on home loans were strong inducements to invest. These factors along with the change in social and work structure due to the pandemic also convinced investors to look at bigger properties and loans.

The average home loans ticket size increased 10.87 per cent year-on-year to 26.41 lakh in 2020, while the average ticket size for women went up 21.59 per cent on-year to Rs.31.20 lakh compared with an increase of 10.15 per cent to Rs.26.04 lakh for men, the report said. “The contribution of home loans under Rs 30 lakh also decreased to 68 per cent from 72 per cent last year.”

BankBazaar said that the non-metros were the biggest drivers of recovery. In the credit card segment, contribution from non-metros grew more than 20 per cent. They were also ahead of metros when in personal loans category. The average personal loan ticket size was Rs 1.84 lakh in metros and Rs 2.09 lakh for non-metros.

“The share of non-metros for contactless credit products also went up from 20 per cent in Q2 to 40 per cent in Q3 and the trend continues in Q4 as well,” the BankBazaar statement said.

Credit cards segment plunged sharply in the wake of the pandemic but also recovered equally fast, the report said. The combined impact of last year’s recession followed by the pandemic drastically affected the new-to-workforce segment aged 25 or less. Job losses and salary cuts at one end and tightened credit policies at the other resulted in a drop of more than 50 per cent in the under-25 segment.

BankBazaar CEO Adhil Shetty commented, “Data shows that despite the odds, India is on the way to recovery as economic activity gets back on track. During these tough times, technology provided the solution to some very challenging problems.”

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