Retail loans soar 17.7 per cent in 2016, NPAs also move up: Report

Mumbai: Retail loans grew at a healthy17.7 per cent in 2016, but there was an increase in dud loans in the segment which has become a focus area for the lenders amid difficulties to grow corporate books, says a report.

"Consumer lending remains robust with originations and portfolio growing at 17.7 per cent in 2016 over 2015. Secured products, mainly property and gold loans, are growing the fastest," Shahid Charania, credit information company Equifax managing director for emerging markets said in a report today.

The overall retail loans increased 17.7 per cent to Rs 40.25 trillion as of end December 2016. Delinquency rates in the segment, which was labeled as a safe-haven amid asset quality woes in the corporate lending segment, grew to 2.10 per cent in 2016 from 1.52 per cent in 2015.

But the report noted a 0.06 per cent fall in the dud loan ratio in the last quarter of the year. The late improvement in retail NPAs was driven by improvement in portfolios of auto and agri loans at public sector banks and non-bank finance companies, the report said.

It can be noted that every bank is focussing on retail due to a huge slowdown in corporate credit pick-up as private investments struggle to pick-up. The last time credit grew lower than this was in fiscal 1954 when it inched up at 1.7 per cent, according to the Reserve Bank data.

Official data pointed to a 64 year low in overall credit growth at paltry 5.1 per cent for fiscal 2017. A surge in property and gold loans drove the secured segment to grow the fastest at 18.7 per cent in the December quarter over the same period last year.

Half of the over Rs 40 trillion of receivables are with state-run banks, with mortgage and agri loans contributing to 51 per cent of them, it said. The loan originations grew 4.3 per cent in the year even though the same were down 11 per cent sequentially in the December quarter when the demonetisation exercise hit the credit demand as housing, agri and gold loan originations decreased the most, it said. Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana and Karnataka had the highest originations in the fourth quarter, it said.