Surge in personal and consumer durable loans during festive season, Maharashtra dominates originations: Report

The festive season remained a crucial driver for consumption-based lending in India, with a significant surge in personal and consumer durable loans during Q3 FY23 to Q3 FY24, according to a recent report by CRIF High Mark.

India observes good growth in originations across major consumer lending product categories in the festive season from Q3 FY23 to Q3 FY24. Personal Loans witnessed 13 per cent growth in originations (value) from Rs 205.7 k crore to Rs 232.2 k crore from Q3 FY23 to Q3 FY24 and 22.3 per cent growth in originations (volume), revealed a latest report by CRIF High Mark.

There is a shifting borrower preference towards smaller ticket loans during the festive season with an 8 per cent decline in average ticket size from Rs 74.1 k in Q3 FY23 to Rs 68.4 k in Q3 FY24. Public Sector Banks continue to dominate originations (value), while NBFCs (Fintechs and Others) are market leaders in terms of volume.

While Private Banks gain a share in volume, NBFCs gain a share in value from Q3 FY23 to Q3 FY24. Furthermore, the proportion of very low and low-risk borrowers increased from 46.5 per cent in Q3 FY23 to 50.6 per cent in Q3 FY24, said the report.

Consumer durable loans witnessed a significant surge with a 27.1 per cent growth in originations by value from Rs 31.4 k crore to Rs 39.9 k crore from Q3 FY23 to Q3 FY24, driven by customers capitalising on the season's discounts and lucrative deals on electronic goods and home appliances.

The report highlighted that there was a 10 per cent rise in originations by volume from Q3 FY23 to Q3 FY24. Additionally, there was a significant 16.3 per cent growth in the average ticket size, rising from Rs 20.9 k in Q3 FY23 to Rs 24.3 k in Q3 FY24. NBFCs saw an uptick in market share both by value and volume during the festive seasons of Q3 FY22, Q3 FY23, and Q3 FY24.

Furthermore, there was a steady rise in the proportion of very low and low-risk borrowers, increasing from 45.2 per cent in Q3 FY23 to 47.6 per cent in Q3 FY24.

Auto loans witnessed 9 per cent growth in originations (value) from Q3 FY23 to Q3 FY24 and 10.7 per cent growth in average ticket size from Rs 7.3L in Q3 FY23 to Rs 8.1L in Q3 FY24.

Very low and low-risk borrowers increased from 50.3 per cent in Q3 FY23 to 54.9 per cent in Q3 FY24. Private Banks and NBFCs witnessed a decline in originations share (value and volume) from Q3 FY23 to Q3 FY24.

Further, two-wheeler loans witnessed 21 per cent growth in originations (value) from Rs 25.1 k crore to Rs 30.4 k crore from Q3 FY23 to Q3 FY24.

The report observes that originations by value in this category typically surge during the festive season every year fueled by dealer discounts and low interest rates offered during this period.

It also highlighted a 21 per cent growth in originations by value with 25 per cent growth in rural, 21 per cent in semi-urban, and 14 per cent in urban geographies from Q3 FY23 to Q3 FY24. Additionally, there is a 7.2 per cent growth in average ticket size from Rs 83k in Q3 FY23 to Rs 89k in Q3 FY24.

Home loans on the other hand saw an 8.9 per cent growth in originations by value from Rs 227.1 k crore to Rs 247.4 k crore from Q3 FY23 to Q3 FY24.

Notably, there was a substantial 17.4 per cent growth in originations by value for loans exceeding Rs 35 lakhs. Furthermore, the average ticket size witnessed a significant 9.9 per cent growth, escalating from Rs 24.3L to Rs 26.6L from Q3 FY23 to Q3 FY24.

Maharashtra dominates originations

Maharashtra dominates originations by value in all categories except two-wheeler loans. The report highlighted that the top 10 states contributed to 72 per cent of overall originations by value in Q3 FY24 for these five major consumer lending products.

Among these top 10 states, originations (value) were highest in Maharashtra for Auto Loans, Personal Loans, Consumer Durable Loans, and Home Loans and in Uttar Pradesh for Two-Wheeler Loans.

Uttar Pradesh elevated its position from 4th largest to 3rd largest state in terms of originations (value) from Q3 FY23 to Q3 FY24, whereas Kerala replaced Madhya Pradesh as the 10th largest state by originations (value) in Q3 FY24, said the report.

Delhi NCR leads in originations (value) among the top 10 cities for all loan categories except home loans.

According to the report, originations by value were highest in Mumbai for home loans. The report further added that BT100 (Beyond top 100) cities identified as cities with the highest consumer loans portfolio, dominate two-wheeler loans, consumer durable loans, and auto loans originations by value and gained share for two-wheeler loans and consumer durable loans in Q3 FY24.

Source : ETBFSI, 24th April Mumbai