Money & Banking

Retail loans seen doubling to ₹96-lakh cr in 5 years

Our Bureau Mumbai | Updated on December 17, 2019 Published on December 17, 2019

ICICI Bank-Crisil report expects increased private consumption and data analytics to drive the loan book of lenders, NBFCs

Betting big on private demand and improved data analytics, a joint report by ICICI Bank and Crisil estimates that retail loans in India could double over the next five years.

The report sees the retail loan book of lenders and non-banking finance companies (NBFCs) doubling to ₹96-lakh crore by March 2024 from ₹48-lakh crore as on March 31, 2019. This would translate into a CAGR of 14-15 per cent.

The report, which was released on Tuesday, predicts that this growth will rest on five key pillars — increased demand for private consumption (of home, car, consumer durables, credit cards), increased availability of various consumer data, willingness of consumers to take loans, improved usage of data analytics, and regulatory initiatives for growth in low-cost home loans and MSME credit.

According to the report, Mining the Golden Opportunity in Retail Loans, the mortgage loans market — normal and low-cost home loans and credit against property — is expected to double to ₹46.1-lakh crore by March 2024.

Unsecured loans, including personal loans and credit cards, would also more than double to ₹13.8-lakh crore in the next five years. Loans to MSMEs are expected to more than double to ₹13.2-lakh crore in the period. Similarly, loans for commercial vehicles, four- and two-wheelers will near-double to ₹17.5-lakh crore.

About six crore retail loans accounts are added annually in the country and the report expects this number to rise to about 10.8 crore in the next five years.

‘New economy doing well’

The findings come at a time when the economy is slowing and there are concerns about stagnating private consumption and demand.

However, according to Crisil COO and President Amish Mehta, the expectation of doubling of retail loans is based on estimated GDP growth rate of 6.5-7 per cent in the five-year period. “We expect things to change. The low base effect, reduction in interest rates, reduction in corporate tax rate and income guarantee scheme for farmers could have a positive impact,” he told reporters.

Anup Bagchi, Executive Director, ICICI Bank, said there is “polarity” in the economy now. While the investment-driven old economy is hurting more due to the slowdown, the new economy of tech firms and start-ups is still doing well.

According to the report, digital lending, which was estimated at ₹2.7-lakh crore as of March 2019, is forecast to increase to ₹15-lakh crore by March 2024, representing 16 per cent of the total retail lending.



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Published on December 17, 2019
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