Steady increase of home loan disbursals reflects all-round robustness

In 2021, the growth in the Rs 0-25 lakh category was also 67 per cent over the year 2020. The study shows that out of the overall portfolio outstanding of home loan which grew by 16 per cent from December 2021 to December 2022, the private sector banks witnessed growth of 20 per cent from December 2021 to December 2022 -- Rs five lakh crore portfolio outstanding at the end of December 2022

Approximately 34 lakh home loans coming to an overall Rs nine lakh crore were disbursed during the year ending December 2022. Of this the less than Rs 25 lakh ticket size category accounted for the maximum number of disbursals, revealed a study on retail loans by Equifax and Andromeda.

Banks, housing finance companies, and other institutions provided the loans from January to December 2022, registering an annual growth of 18 per cent. The number of loans given too was up by 17 per cent during the 2022 calendar year. The

overall portfolio outstanding of home loans grew by 16 per cent from December 2021 to December 2022, said the study titled 'Indian Retail Loans Overview-April 2023'.

It further revealed that the personal loan segment registered an impressive growth of 57 per cent during 2022. The market size of the retail industry reached Rs 100 lakh crore by December 2022.

Among the different loan segments, the study said that on December 31, 2022 retail industry reported 54 crore active loans. Furthermore, it added, as on December 31, 2022 there were 6.5 crore active consumer durable loans, registering an annual growth of 48 per cent over the last year.

Talking to Bizz Buzz, V Swaminathan, Executive Chairman – Andromeda Sales and Distributions said, “Be it public sector banks, private sector banks or housing finance companies (HFCs), each is witnessing healthy growth in home loan business.”

While the loans in 0-25 lakh ticket size category accounted for the 67 per cent of disbursals, the disbursals increased by 36 per cent in Rs 75 lakh- Rs 1 crore ticket size category in January-December 2022 compared to the preceding year. In 2021, the growth in the Rs 0-25 lakh category was also 67 per cent over the year 2020. The study shows that out of the overall portfolio outstanding of home loan which grew by 16 per cent from December 2021 to December 2022, the private sector banks witnessed growth of 20 per cent from December 2021 to December 2022 -- Rs five lakh crore portfolio outstanding at the end of December 2022.

Observing that retail lending was badly affected during the pandemic, the report said, "it has bounced back by registering 40 per cent annual growth from January to December 2022 over January to December 2021. Retail lenders disbursed 31 crore loans from January to December 2022.

The report said, "Personal loans witnessed a growth of 32 per cent from December 2020 to December 2021 and 57 per cent from December 2021 to December 2022."

According to Swaminathan, "The rise in demand for personal loans in India can be attributed to multiple factors such as the growing consumption-driven demand, the ease of availing loans and the

competitive landscape among lenders. Despite the recent RBI policy rate hikes, personal loan interest rates have not seen a similar increase compared to home loan rates."

However, he added borrowers must exercise caution while availing personal loans, keeping in mind their repayment capacity and avoiding

the pitfalls of debt traps.

KM Nanaiah, Managing Director, Equifax Credit Information Services and Country Leader – India & MEA, Equifax, said, “The insights presented in

our report will be immensely beneficial for lenders as they aim to uphold high underwriting standards, manage risks prudently and increase operational efficiencies. Furthermore, the report will enable lenders to navigate the new high growth environment effectively by leveraging the knowledge gained from the pandemic.

“I would like to extend my congratulations to the Equifax and Andromeda teams for their efforts in launching this report. It is testament to their commitment to excellence, and I am confident that it will undoubtedly be an essential resource for the financial industry,” he said.

The contribution to retail loan disbursement was highest by the public sector banks and the private sector banks. However, the Non-Banking Financial Companies (NBFCs) witnessed a growth of 78 per cent during January 2021 to December 2021 compared to January 2020 to December 2020. The private sector banks recorded a growth of 24 per cent on an annual basis.

"NBFCs play a major role in the country's financial system dominated by public and private sector banks. NBFCs are helping the much-required credit reach every part of the country”, Swaminathan opined.

Besides a large number of branches, NBFCs are heavily deploying digital infrastructure and using App-based technology for loan disbursals.