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Overall portfolio at risk (PAR) for consumer loans in the 31-180 day bucket improved to 3.5 per cent in September 2023 from 4.7 per cent in March 2020. However, PAR for home loans deteriorated to 2.6 per cent from 2.4 per cent, and for credit cards to 8.8 per cent from 8.4 per cent.
PAR for personal loans worsened slightly to 2.4 per cent from 2.5 per cent. As such, origination or sanction quality showed much faster deterioration in early delinquencies, reflected in the increase in 30+ day delinquencies for three-month old loans with a ticket size of up to ₹50,000.
As of September 2023, 8.5 per cent of loans under ₹10,000 and 5.6 per cent of those between ₹10,000-50,000 were in the 30+ DPD (days past due) bucket after three months of sourcing, as per the ‘FinTech Barometer’ report on Personal Loans by CRIF High Mark and Digital Lenders Association of India (DLAI).
The report is based on data from 52 DLAI members submitted to credit bureaus between March 2020 and September 2023.
Top States
Consumer loans grew 64 per cent from March 2020 to September 2023, led short-term personal loans which grew 204 per cent, gold loans (121 per cent), personal loans (115 per cent), credit cards (76 per cent), home loans (53 per cent) and business loans (67 per cent). Maharashtra, Tamil Nadu, Karnataka, Uttar Pradesh and Rajasthan were the top States for consumer lending.
Origination of personal loans increased two-fold in terms of origination value, and 2.6 times in terms of origination volume between FY20 and FY23. However, growth tapered to 32 per cent in FY23 with portfolio outstanding at ₹10.7 lakh crore as of March 2023. DLAI members contributed 7.9 per cent to origination value and 19.8 per cent to origination volume in FY23.
Highest growth in origination value was for loans between ₹10,000-50,000 and those over ₹10 lakh. While loan sanctions of less than ₹1 lakh are still significant for digital lenders, their share has reduced over the past three years, especially for short-term personal loans of less than ₹50,000, the report said.
Demand for short-term personal loans saw a 3.5-fold growth in the beyond top 100 cities compared with 2.3 times growth for the top 100 cities for loans of less than ₹10,000. For the ₹10,000-50,000 loan bucket, the top 100 cities saw three- fold growth as against a five-fold growth for beyond the top 100 cities.
However, given the less saturation in the ‘beyond top 100 cities’, portfolios for these geographies are operating at similar risk levels compared to the top 8 and top 100 cities, the report said.
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