Retail loan book set to double to Rs 96 lakh crore in next 5 years: Report

Anup Bagchi, executive director, ICICI Bank said, “India’s GDP per capita in terms of purchasing power parity is $7,762 … This junction will prove to be an inflection point, as it was with another large economy a few years ago. We foresee that in the next five years, the domestic retail loans market is poised to double to Rs 96 lakh crore.” As per the report, the five pillars that are going to support expansion of the market are: Greater information availability progressively reducing the risk in lending; lower costs for customers due to intensifying competition; regulatory and government initiatives; five-fold increase in digital lending to Rs 15 lakh crore; and reducing operating costs due to greater use technology and data analytics which will boost profitability.

The top five players are foreseen continuing their market dominance, across asset classes.

Further, new private banks are also expected to gain market share from their public sector peers. Additionally, the entry of new types of players is likely in the market targeting specific segments, in line with global trends, according to the report. Despite rising competition, top five players across most retail asset class segments are expected to account for high market share.

Digital lending , estimated at Rs 2.7 lakh crore as of March 2019, is forecast to increase to Rs 15 lakh crore, representing 16 per cent of retail lending in FY24. Banks will dominate the market, accounting for 77 per cent of total digital loans.

However, a recent report by TransUnion Cibil revealed that 70 per cent of credit applicants dropped mid-way through the application process. As many as 22 million consumers are seeking credit opportunities every month, but 70 per cent of them drop out mid-way due to the cumbersome procedures.