With the festival season now starting, lenders are expecting a further uptick in retail loan demand and many banks are now announcing special schemes.
“Credit demand from retail customers has been reviving. With Covid cases low in many parts of the country and the festival season starting, there is expectation of heightened interest in loans for items such as consumer durables as well as home and auto loans. Typically, this is the time when people invest in new homes and purchase vehicles,” noted an executive with a private bank.
Kotak Bank
Private sector lender Kotak Mahindra Bank has announced a 15-basis point reduction in home loan rates as a limited period festival season offer beginning September 10 and ending November 8.
State-run Punjab National Bank and Bank of India too have announced festival loan schemes and many other lenders are expected to announce special festival offers in coming weeks.
Fintech lenders have also reported rising demand for credit from retail customers.
“We are seeing improved demand for credit from the first quarter of 2021, supported by economic recovery and improving domestic market due to the reduced risk of Covid-19. We are currently disbursing loans worth ₹120-130 crore per month on a consistent basis since July 2021 which is nearly 70 per cent higher compared to a year ago,” said Yogi Sadana, CEO, CASHe, adding that with the festival season around the corner, he expects an uptick for loan demand for purposes specifically related to wedding, travel, house improvement and purchase of white goods.
Yezdi Lashkari, Founder and CEO, Flexmoney Technologies, said there has been over 4.5 times year on year growth in consumer credit disbursed through its network just this past quarter. “The main use of these loans is for the purchase of electronics and appliances, fashion and personal care, mobile, home and furnishing,” he noted.
In recent months, retail loans have been growing at a robust pace with most banks focussing on this book. According to RBI data, personal loans registered an accelerated growth of 11.2 per cent in July 2021 as compared to 9 per cent a year ago, primarily due to higher growth in ‘loans against gold jewellery’ and ‘vehicle loans’.