Home loans, LAP pull down retail loan growth in Q1FY25

Retail loan originations (new accounts opened) growth among consumption-led credit products moderated in the quarter ending June 2024, including personal loans. Home loan origination growth dropped further from -4 per cent in June 2023 to -9 per cent in June 2024. Loan Against Property growth fell from 13 per cent to 2 per cent over the same period. Auto loans saw a sharp decline with growth falling from 10 per cent in 2023 to 2 per cent in 2024. Two-wheeler loans also slowed down but managed to grow in double digits from 17 per cent in 2023 to 13 per cent in June 2024. With the RBI increasing the risk weights on unsecured retail loans (personal loans and credit cards) in November 2023, personal loans were the most hit with growth falling from 36 per cent in 2023 to mere 3 per cent in June 2024. Similarly, growth in credit card originations fell from 8 per cent in June 2023 to -30 per cent. Consumer durable loans fell from 14 per cent in June 2023 to 4 per cent in June 2024.

Credit performance, as measured by balance-level delinquencies, improved across most products with credit cards being the only exception. Balance level serious delinquencies (measured as 90 days or more past due) rose 17 basis points for credit cards.

Rajesh Kumar, MD and CEO of TransUnion CIBIL said, “Timely regulatory guidance and given the relatively high credit-deposit ratio, we are witnessing a moderation in retail credit growth. Lenders can now look at identifying pockets of deserving consumers across risk segments to provide access to credit for them while driving the next phase of sustainable retail credit growth.”

The share of originations for New-to-Credit (NTC) consumers has declined consistently over the past five years. The share of NTC consumers in originations dropped from 16 per cent in the quarter ending June 2023 to 12 per cent in the quarter ending June 2024, which is the lowest share recorded by TransUnion CIBL for this segment.