Get Insights into Trends and Patterns Shaping Major Lending Product Categories in India
Home loans growth in India has surged significantly over the last few years
The Indian credit landscape has undergone significant growth and transformation over the past few years, driven by various factors including technological advancements, regulatory changes and an evolving financial ecosystem, a new report said.
Home loans growth in India has surged significantly over the last few years, driven by low interest rates, increasing urbanisation, and favourable government policies.
As of Mar ’24, the portfolio outstanding of Home Loans stood at Rs 36.2 L Cr. Y-o-Y growth in Originations value stood at 9.2% by value and 2.6% by volume in FY24. Home Loans are dominated by the public sector and private banks.
CRIF High Mark, a leading Indian credit bureau, recently launched the fourth edition of its flagship report, How India Lends. The report deep dives into Consumption Lending, MSME Lending, and Microfinance Lending for the last five years (FY20 to FY24) with an emphasis on key insights into the industry and consumer trends.
Consumption lending includes Home Loans, Personal Loans, Two-Wheeler Loans, Auto Loans, Consumer Durable Loans and Credit Cards.
MSME lending includes Entity and Individual loans. Entity MSME Loans are defined based on entity-level credit exposure of up to Rs 50 Crore.
Individual MSME Loans include Business Loans, Property Loans, Commercial Vehicle Loans and Construction Equipment Loans. Corporate Loans refer to loans given to Mid and Large-size entities with credit exposure of more than Rs 50 Crore and are reported to the Commercial Bureau.
Insights into Trends and Patterns Shaping Major Lending Product Categories in India
Consumption Loans
Portfolio outstanding of Consumption Loans increased by 15.2% YoY to Rs 90.3 Lakh Cr as of Mar’24, however, portfolio growth has decelerated (from 17.4% as of Mar’23) primarily driven by the slowdown in the Home Loans segment (40.1% of consumption loans portfolio by value)
1. Home Loans:
–Portfolio growth slowed down to 7.9% YoY (vs. 23% YoY as of Mar’23) due to muted growth in originations (9.2% in FY24 vs 18.2% in FY23)
–Shift in Originations (by value and volume) from ticket size Rs 5L – Rs 35L to Rs 35L +
–Growth of 32% in Average Ticket Size (ATS) from Rs 20.1L in FY20 to Rs 26.5L in FY24
2. Personal Loans:
–Robust Portfolio growth (26% YoY as of Mar’24) despite recent regulatory reforms
–Rs 10L+ Ticket Size loans continue to increase their share in originations by value, while
–Banks dominate Originations (by value) and NBFCs dominate Originations (by volume)
3. Two-wheeler loans:
–Growth accelerated to 34% YoY (from 30% as of Mar’23) primarily driven by the shift in originations to Higher Ticket Size loans, despite lower origination volume growth YoY (13% in FY24 vs. 32% in FY23)
–Shift in Originations (by value and volume) with a 4.6x growth can be seen for Rs 75K+ from FY20 to FY24
4. Auto Loans:
–The marginal slowdown in Portfolio growth to +20% YoY (vs. 22% as of Mar’23) buoyed by Shift in Originations to Rs 10L+ Ticket Size loans but dampened by lower growth in overall origination volumes
–5% growth in Originations Volume (vs. 21% in FY23) and 12.5% growth in Originations Value (vs. 37.3% in FY23)
5. Consumer Durable Loans:
–Robust portfolio growth of 34% YoY (vs. 26% YoY as of Mar’23) driven by the shift in originations to Rs 25K+ ticket size loans, which offset the muted growth in originations volumes (8.5% in FY24 vs 38.2% in FY23)
–21% growth in Originations by value, and 8.5% growth by volume in FY24
–Private banks gained origination share from FY20 to FY23, however NBFCs regained some of their lost share in FY24
6. Credit Cards:
–16.5% growth in Active cards from Mar’23 to Mar’24
–Credit card balances reached Rs 3.0 lakh crore, with 999.1 lakh cards in circulation as of Mar’24
MSME Lending: Individual MSME segment growth outpaces that of Entity MSMEs, both in terms of portfolio growth (28.9% YoY vs 6.6% YoY) and originations growth (12.6% YoY vs 3.1%).
Individual MSME Loans
–Portfolio outstanding of Individual MSME Loans stands at Rs 35.7 Lakh Cr as of Mar’24 with growth accelerating to 29% YoY (vs. 15% YoY as of Mar’23)
–Witnessed Y-o-Y growth in Originations by value at 12.6% and by volume at 19.4% in FY24
–Individual MSMEs witnessed improvement in delinquency across all Ticket sizes and Lender types
Entity MSME Loans
–The Portfolio outstanding of Entity MSME Loans stands at Rs 28.4 Lakh Cr as of Mar’24 with growth decelerating to 6.6% YoY (vs. 17.2% as of Mar’23)
–The sector witnessed Y-o-Y growth in Originations by volume at 18.9%, while 3.1% by value, with the Micro Segment being the largest contributor
Microfinance Lending:
–Portfolio growth accelerated to 27% YoY (vs. 21% YoY as of Mar’23) with the Microfinance Loans portfolio outstanding of Rs 442.7 K Cr as of Mar’24.
–The average ticket size for MFIs increased by 11% from Rs 40.9K to Rs 45.4K between FY23 and FY24
–PAR 31-90% and PAR 91-180% were stable as of Mar’24 compared to Mar’23
Sanjeet Dawar, MD, CRIF High Mark, said, “This year’s report highlights the continued dominance of home loans and the notable growth in personal loans and two-wheeler loans. We also observe a significant rebound in NBFCs’ market share and a marked expansion in the Microfinance sector. The stability in delinquencies and the strong performance across various lending categories underscore the ongoing resilience and vitality of the Indian credit market.”
