The festival season-led spending and consumer exuberance is driving strong record disbursals for NBFCs, led by both consumer and MSME finance.
M&M Financial said it estimates overall disbursements for October to be around ₹5,250 crore, similar to last year. The YTD (year-to-date) disbursements for October 2023, at ₹30,700 crore, were 16 per cent higher compared to the previous year.
Business assets at ₹95,750 crore, were up 16 per cent over March 2023 and 27 per cent over October 2022.
“The festival season presents a significant opportunity for businesses and consumers, with this year witnessing massive loan demands. MSMEs supplying in-demand segments like food, apparel, electronics, and appliances experienced a surge in orders, driven by increased consumer demand, particularly for business owners selling through modern trade platforms and large format stores,” said Mahesh Shukla, CEO & Founder of digital lending platform PayMe.
Capri Global Capital said it disbursed a record 10,000 car loans in October worth ₹1,000 crore. The lender is aiming for car loan disbursements worth ₹10,000 crore in FY24 compared with ₹5,700 crore in FY23.
“The demand for car loans, especially for mid-segment SUVs, is on the rise, particularly in tier 2 and tier 3 cities,” said Capri Global MD Rajesh Sharma, adding that borrowers come from a broad spectrum, including entry level cars to premium car owners.
Nearly half of the credit demand during the festival season is originating from tier 3 cities, led by higher funding and working capital requirements of MSMEs and increase in consumer purchases of white goods, vehicles, personal clothing, and décor, as per reports.
Corporate or MSME lending growth is seen as being led by demand for working capital loans given that sales volumes are expected to be 1.5 times higher this year. On the other hand, consumer loan demand is being driven by personal loans, automobile loans, and equipment loans.
Earlier this week, SBI Card MD and CEO Abhijit Chakravorty had said that because of the delayed festival season this year, most major events are falling after October, implying that the entire impact of heightened consumer spending will be felt in Q3 FY24 instead of being spread out across two quarters last year. As a result, consumption patterns across the market indicate that October and Q3 FY24 could see record spends, he said.
“It can be safely stated that the trend might continue till the end of the year, on the back of improving employment rates and rising disposable income in rural areas,” Shukla said.