Personal Loans and Home Loans dominated festive lending: Report

Personal loans outshined all other products by witnessing nearly 2X growth in originations (value) during the festive season. 

According to a report by CRIF High Mark titled, ‘How India Celebrates – Report on Festive Lending in India’, personal loans surpassed all other types of products.  

From Rs 75,088 crore in FY 19 to Rs 147,236 crore in FY22, the personal loan had 4X growth in originations (volume) from 39.9 lakh accounts in FY19 to 158.1 lakh accounts in FY22. 

The report highlights overall trends and movement across key consumer lending products such as Personal, Home, Consumer Durable, Two-Wheeler, and Auto loans during the festive season – Q3 every year (October – December), from FY19 – FY22. The festive season is defined as the third quarter of the financial year (Oct-Nov-Dec).

Home loans, on the other hand, witnessed 40 per cent growth in originations (value) during the festive season from Rs 138,544 crore in FY19 to Rs 193,227 crore in FY22, and 21 per cent growth in originations (volume) from 6.7 lakh accounts in FY19 to 8.1 lakh accounts in FY22.

The company claims that the key trend to note is that the share of Q3 in originations (value) increased from FY19 to FY21 for all products. However, the report stated, that personal loans and home loans outshine across all 4 financial years. 

Performance of major loan products

Below are the key trends observed across major consumer lending products – Personal, Home, Consumer Durable, Two-Wheeler and Auto loans – 

• Personal loans witnessed nearly 2x growth in value in FY22, and 4X growth from FY19 to FY22. There was an increase in originations share (value) of Public Sector Banks and NBFCs from Q3 of FY19 – FY22. Private banks witnessed a decline during the same period. 

However, the report stated Public Sector Banks saw a decline in originations share (volume), whereas Private Banks and NBFCs saw an increase, during the same period. 

• Home Loans: The report stated that there was an increase in originations share (both value and volume) of Private Banks from Q3 of FY19 – FY22, whereas Public Sector Banks and HFCs observed a decline during the same period. 

• Consumer Durable Loans achieved 32 per cent growth in value from Rs 19,683 crore in FY19 to Rs 26,075 crore in FY22, the report stated and 33 per cent growth in originations (volume) from 91.6 lakh accounts in FY19 to 121.9 lakh accounts in FY22. 

There was an increase in originations share (both value and volume) of Private banks from Q3 of FY19 – FY22, and even though the category is dominated by NBFCs, there is a decline in their share.  

• Two-Wheeler Loans saw flat growth in originations (value) from Rs 16,393 crore in FY19 to Rs 15,281 crore in FY22 and a 29 per cent decline in originations (volume) from 28.7 lakh accounts in Q3 FY19 to 20.4 lakh accounts in Q3 FY22.

There was a decline in originations share (both value and volume) of Private banks and NBFC – Captives during the festive season. NBFC – Others witnessed growth during the same period. 

• Auto Loans witnessed flat growth in origination (value) from Rs 54,367 crore in FY19 to Rs 56,420 crore in FY22. Originations (volume) in Q3 FY19, Q3 FY20 and Q3 FY21 remained above 10 lakh accounts. However, in Q3 FY22, it dropped to 8 lakh accounts. 

The report showed that there was an increase in originations share (both value and volume) of Public Sector Banks and Private Banks from Q3 of FY19 – FY22, whereas NBFCs witnessed a decline. 

Navin Chandani, MD and CEO, CRIF High Mark, says, “The report, How India Celebrates – Report on Festive Lending in India, was developed to capture the key trends and movements for major consumer lending products. Our data from FY19 – FY22 shows that the lending sector is boosted by significant demand across major consumer products during the festive season; it continues to be the most preferred period to make important, high-value purchases.” 

He further adds, “The insights will aid all key players in the consumer sector to leverage the strong consumer demand during the festive season in an improved manner and build a collaborative ecosystem, that will boost the lending community at large.”

South and West India dominate in origination 

According to the report, South and West India dominate in originations. Among the top 10 states, originations (value) is highest in Maharashtra for Auto, Personal, Consumer Durable and Home loans, and Uttar Pradesh for Two-Wheeler loans.

Among the top 15 districts, most are from southern and western parts of the country, with Jaipur, NCR and Kolkata being the exceptions. Originations (value) is the highest in Bengaluru across all products, with Home loans and Personal loans dominating, followed by Auto loans and Consumer Durable Loans.