Consumer Lending in India

Greater spending ramps up demand for loans in India

Consumer lending has grown at a healthy pace in India; and this trend is expected to continue in the forecast period. Although 2018 saw declines in durables lending due to banks making fewer such loans available amid an increase in the number of defaulters, healthy growth returned in durables lending in 2019.

Consumers’ lending solutions go beyond banks

Alternative financial service providers, such as NBFCs, have been playing an increasingly important role in providing consumer loans. These financial institutions are more popular for loan disbursals in regions that are not serviced adequately by banks.

Government’s low-cost-home initiative fuels mortgages/housing

Mortgages/housing registered strong current value growth in the review period, supported by the increasing demand from the urban middle classes to own homes as well as favourable government policies. For instance, the government’s Pradhan Mantri Awas Yojna (PMAY) low-cost housing policy, rolled out in 2015 for implementation over 2015-2022.

Indians stay in the black, keeping NPA rates down

The low level of non-performing loans (NPAs) across consumer lending categories demonstrates that Indian consumers are debt-averse and have good loan repayment records. For instance, the share of credit card and non-card non-performing loans (NPAs) remained low in 2019.

Borrowing levels will remain healthy across consumer lending

The key trends in consumer lending are anticipated to continue in the forecast period. Consumer credit outstanding balance is predicted to post strong value growth prices over 2019-2024.

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