Introduction:
The retail lending landscape in India witnessed moderated growth during the quarter ending September 2023, influenced by tightened credit supply, especially on consumption-led products. While home loans exhibited positive growth, there were notable changes in credit performance and origination trends, as outlined in the TransUnion CIBIL Credit Market Indicator report.
Key Points:
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Tightened Credit Supply:
- Financial institutions tightened credit supply, particularly on consumption-led products like credit cards, consumer durable loans, and personal loans. This moderation in credit growth contributed to a decline in the overall originations growth rate.
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Credit Performance Improvements:
- Balance-level delinquencies showed improvement across most products, except for marginal deterioration in credit cards and personal loans. Despite the moderated growth, there were positive trends in credit performance, reflecting prudent lending practices.
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Home Loan Dynamics:
- Home loans experienced a 9% growth in value, indicating sustained demand in the housing sector. However, low-value home loans, constituting a significant portion of originations, witnessed a decline in volume, impacting overall home loan originations growth.
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New-to-Credit Consumers:
- The share of new-to-credit (NTC) consumers in originations decreased from the previous year, suggesting a lower influx of first-time borrowers into the credit market. This decrease in NTC origination volumes highlights changing consumer behavior and lending patterns.
Conclusion:
India's retail lending sector faced challenges in the quarter ending September 2023, marked by tightened credit supply and moderated growth in consumption-led products. Despite this, the housing sector showed resilience, with positive growth in home loans. The TransUnion CIBIL Credit Market Indicator report underscores the importance of monitoring credit performance and originations trends to navigate evolving market dynamics and consumer preferences. As financial institutions adapt to changing conditions, maintaining a balance between risk management and facilitating access to credit remains crucial for sustainable growth in the retail lending sector.
