Three large states — Tamil Nadu, Maharashtra and Karnataka — accounted for nearly 40 per cent of all retail lending balances though they represent only about 32 per cent of the overall credit population and around 20 per cent of the Indian population, says a study.
As per a TransUnion CIBIL report, retail balances as of June 2018 were highest in Maharashtra at Rs 5,50,200 crore — representing nearly 20 per cent of all retail balances — followed by Tamil Nadu (Rs 2,77,400 crore) and Karnataka (Rs 2,74,900 crore). “In total, the 10 largest Indian states represented Rs 21,27,400 crore in balances, which comprised almost 76 per cent of the total balance. The 10 largest balance markets made up 68 per cent of the consumer credit population,” the Cibil study said.
Overall, the study found that retail lending balances rose nearly 27 per cent between Q2 2017 and Q2 2018. Personal loan balances (up 43 per cent) and credit card balances (up 42 per cent) grew at the highest rate of all major credit products in the last year. “Average borrower balance growth for both of these credit products increased nearly 14 per cent in that same time frame,” it said.
“It is clear that the major urban areas of India are leading the charge for increased retail credit use,” said Yogendra Singh, vice president of research and consulting for TransUnion CIBIL. “These states generally have more urbanized areas and show more signs of economic development. As a result, consumers in these areas are utilising various forms of credit to enhance their lives.”
Total balance growth was broad-based across all products, increasing by at least 23 per cent year-over-year for all major products,” said Singh. “Balances growth was largely driven by volume growth that rose at least 20 per cent for most major credit products. The retail lending sector continues to expand strongly, as consumers are seeking credit and lenders are making credit available. With delinquency rates remaining at controlled levels, this points to a well-functioning consumer credit market.” While total balances and account volumes rose, average consumer balances increased modestly. Loans against property was the only category which witnessed a significant rise in serious delinquency rates, growing by 65 bps year-over-year to 3.04 per cent in Q2 2018, it said.