Personal Retail Loans Surge By 50% In 2022, Says Andromeda & Equifax Report

Maximum number of personal loans were disbursed by non-banking financial companies. Private banks led the pack in terms of outstanding portfolio. Overall, personal loans in retail industry show a positive growth
4 Trends In Small Ticket Loans Post Covid-19 Observed
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The number of retail loans increased from 35 million in March 2020 to 40 million over one year, a 12.5 per cent increase, and by a huge 50 per cent margin to 60 million by end of March 2022, as compared to the year-ago period. 

The key findings appear in the report Indian Retail Loans Overview - August 2022, curated jointly by Andromeda and Equifax. 

With respect to the book size of personal loans, the figure shows an increase of 33.33 per cent, from Rs. 6 lakh crore in March 2021 to Rs. 8 lakh crore, a year later. The figures in March 2022 were reported to be Rs. 5 lakh crore. 

Interestingly, the maximum number of personal loans were disbursed by non-banking financial companies (NBFCs), and not private banks. The latter occupy the second place in ranking. They disbursed a total of 120 million loans from March 2021 to March 2022, reporting a 64 per cent increase, compared to the previous fiscal year. 

Raoul Kapoor, Co-CEO, Andromeda Sales and Distributions Pvt Ltd. explained how the upward surge in personal loans go a long way in helping the economy recover.

“If the trend in the growth of personal loans sustain, we can safely assume the economy will do well in the coming years. At the same time, we must keep in mind that interest rates are on the rise following three consecutive rate hikes by the Reserve Bank of India (RBI) in four months. Additionally, there is no let-up in the geopolitical tensions, and these two factors will certainly weigh on the minds of consumers,” he said. 

The report also highlighted the extent of portfolio outstanding by the retail sector. The outstanding amount was calculated to be Rs. 71 lakh crore as of March 2020. This steadily grew to Rs. 80 lakh crore in March 2021, and ultimately increased to Rs. 89 lakh crore. Thus, the outstanding portfolio witnessed an approximately 25 per cent surge in the last two years. 

In terms of growth in outstanding portfolio, private banks led the pack, reporting a 32 per cent increase from March 2020 to March 2022. Compared to private banks, the public sector reported a 21 per cent increase. The NBFCs witnessed an increase of 7 per cent in growth of outstanding portfolio from March 2020 to March 2021. In the 2021-22 period, the value increased by 13 per cent. 

The report by Andromeda and Equifax also shed light on the number of active loans in the retail industry. As of March 2022, this sector accounted for 460 million active loans. Active personal loans also experienced a growth of 46 per cent between March 2021 and March 2022. The personal loan portfolio outstanding grew by 23 per cent in the last one year. 

On similar lines, the Kisan credit cards witnessed a 15 per cent increase followed by credit cards, with 13 per cent growth. 

Based on the joint study, the retail lending industry disbursed - 

  • Loans worth Rs. 20 crore from March 2019 to March 2020 
  • Loans worth Rs. 18 crore from March 2020 to March 2021 (10 per cent decrease), and 
  • Loans worth Rs. 24 crore from March 2021 to Marc 2022 (33.33 per cent increase) 

Overall, the report suggested a positive growth curve for personal loans in the retail industry. 

“The retail loans portfolio segment of the Indian lending industry has shown double-digit growth, with personal loan disbursements specifically recording significant growth,” says KM Nanaiah, managing director, Equifax Credit Information Services Pvt. Ltd. 

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