After lending large sums of money as consumer durables, banks seem to have been discouraging them from fearing arrears in recent years. Outstanding loans to the segment fell 82% to $ 3,225 crore on September 28th.
Banks may be letting non-bank financial corporations (NBFCs) play in this space, given that their exposure to BNFC jumped 41.5% in September.
Lenders say that risk aversion is increased due to the shortcomings of these advances granted for the purchase of products such as smart appliances and home appliances. A year ago, outstanding credit on this space amounted to 17,846 crores of rupees, according to data released by the Reserve Bank of India (RBI).
Indeed, banks appear to be cautious about loans to individuals as a whole – classified as personal loans by the RBI; At just over 15% year-over-year, growth reached its lowest level in 12 months in September, analysts said Anand Rathi Research.
Within this category, the unfavorable aspect has shifted to housing loans, which are guaranteed. While the share of personal loans in non-food loans increased from 24.5% a year ago to 25.3% in September 2018, it went from 56% to 32% over the last year. the same period.
The share of housing in personal loans is increasing as loans for durable goods and education are declining, said the note from AR.
Analysts say banks are wary of unsecured personal loans after a year or two of dizzying growth in the category. Sujan Hajra, chief economist at Anand Rathi Shares and Stock Brokers, said risk aversion was certainly on the rise at banks. "It did not start now. Personal loans, which were the main driver of loan growth last year, have not progressed much in the last six months, "said Hajra.
He also noted that NBFCs are currently meeting some of the demand for sustainable consumer loans, especially as banks' exposure to NBFCs increased by 41.5% year-on-year in September. In other words, the banks could have yielded a significant share of the unsecured market to NBFCs.
The second quarter figures of 19 non-bank entities confirm this. For example, Bajaj Finance, a major player in the financing of consumer durables, reported year-over-year growth of 44% in assets under management in the mainstream consumer business category.
As of January 2018, nearly one-third of outstanding loans to individuals in the banking system were not guaranteed. Outstanding loans to individuals on January 19 amounted to 18.28 lakh Crore, of which loans worth Rs 5.62 Rupees – about 31 percent – were not guaranteed.