“When I tried to apply for a personal loan about six months ago, banks were unwilling to approve the loan. But I got a loan in no time last week after I responded to an SMS offering the loan.''
The experience of Mr K. Aman, an IT professional, sums up the positive shift in banks' thinking on personal loans.
After tightening their purse strings on personal loans till recently, banks are now increasingly forthcoming in the sanction of such loans.
Till two years ago, personal loans were aggressively marketed, especially by private banks. But subsequently, following concerns on asset quality, they were almost halted.
However, in a shift in their stance, some banks, including HDFC Bank, are extending personal loans even to non-customers. Loans are also being marketed through ATMs and SMS' so as to reach a wider audience. When contacted, a spokesperson for HDFC Bank told Business Line that market conditions in the personal loans segment were ‘healthy'.
“We are sanctioning personal loans to our customers as well as non-customers,'' he added.
According to Mr R. K. Takkar, General Manager, Oriental Bank of Commerce (OBC), the demand for personal loans was ‘good'. OBC is also sanctioning personal loans to the salaried classes, who operate accounts with them.
ICICI Bank is also into personal loans that “are being sanctioned on the basis of the relationship it has with the applicant,'' it said in response to a query.
What made a positive difference now is the increasing use of data with the Credit Information Bureau of India Ltd (CIBIL). During the last one year, CIBIL data has become more comprehensive and is helping bankers take decisions, especially in unsecured loans, say bankers. The interest on personal loans ranges from 15 to 20 per cent.