In 2022, the retail lending sector experienced a robust recovery, exceeding pre-Covid levels. An extensive study on retail loans conducted by Equifax and Andromeda reveals that 3.4 million home loans, amounting to a total of Rs 9 trillion, were disbursed during the year ending December 2022. Notably, the majority of these disbursals fell within the category of loans below Rs 2.5 million.
- Home loans
- Banks, housing finance companies, and other institutions provided home loans worth Rs 9 lakh crore during the January 2022 and December 2022 period, registering an annual growth of 18 per cent.
- The number of loans given too was up by 17 per cent during calendar year 2022.
- Overall portfolio outstanding of home loans grew by 16 per cent from December 2021 to December 2022.
- Personal loans
- The personal loan segment registered an impressive growth of 57 per cent during 2022.
- The market size of the retail industry reached Rs 100 lakh crore by December 2022.
- Other segments
- On December 31, 2022, the retail industry reported 54 crore active loans.
- Furthermore, as on December 31, 2022, there were 6.5 crore active consumer durable loans, registering an annual growth of 48 per cent over the last year.
Experts comment on the growth of retail lending
- V Swaminathan, Executive Chairman of Andromeda Sales and Distributions Pvt Ltd, said, “Be it public sector banks, private sector banks or housing finance companies (HFCs), all are witnessing healthy growth in home loan business.”
- He added that the rise in demand for personal loans in India can be attributed to multiple factors such as the growing consumption-driven demand, the ease of availing loans and the competitive landscape among lenders.
- K M Nanaiah, Managing Director of Equifax Credit Information Services Pvt Ltd and Country Leader – India & MEA, Equifax, said, “The insights presented in our report will prove to be immensely beneficial for lenders as they aim to uphold high underwriting standards, manage risks prudently and increase operational efficiencies. Furthermore, the report will enable lenders to navigate the new high growth environment effectively by leveraging the knowledge gained from the pandemic”.
Contribution of different lenders to retail loan disbursement
- The contribution to retail loan disbursement was highest by the public sector banks and the private sector banks.
- However, the Non-Banking Financial Companies (NBFCs) witnessed a growth of 78 per cent during January 2021 to December 2021 compared to January 2020 to December 2020. The private sector banks recorded a growth of 24 per cent on an annual basis.
- Swaminathan said, “NBFCs play a major role in the country’s financial system dominated by public and private sector banks. NBFCs are helping the much-required credit reach in every part of the country.”
- Besides a large number of branches, NBFCs are heavily deploying digital infrastructure and using App-based technology for loan disbursals.
The strong growth of retail lending in India in 2022 is a positive sign for the economy. It indicates that consumers are confident about the future and are willing to borrow money to finance their purchases. The growth is being driven by a number of factors, including the rising consumption-driven demand, the ease of availing loans and the competitive landscape among lenders. NBFCs are playing a major role in this growth, helping to provide credit to people in every part of the country.