The personal loans segment (the largest segment with 34% share) witnessed a strong growth of 30.1% already for November 2023 boosted by the impact of the HDFC merger, festival demand, growth in credit cards, other personal loans, housing loans, and vehicle loans
Of the outstanding bank credit of Rs 156 lakh, personal loans formed over 50 lakh crore, industry 36 lakh crore, agriculture 19 lakh crore and services 42 lakh crore, according to CareEdge data.
Credit growth in the personal loan space continues to also be driven by miniaturization of credit, increased use of credit bureaus for faster decisions and an increase in electronic transactions.
Within the personal loans segment, all major sub-segments witnessed strong demand during the month. If we consider the growth excluding the merger, it moderated marginally to 18.6% yoy compared to 19.9% yoy in November 2022.
The segments
Housing loans grew by 37.0% indeed in November 2023 compared to 16.6% a year ago mainly due to the merger (reclassification of HDFCs’ advances) and sale of high-value residences. If the merger were excluded, growth would have slowed by about 150 bps to 15.0% yoy. The increase in interest rates has a greater impact on affordable housing, as this loan class faces the additional burden of high rates.
Vehicle loans registered a strong growth of 20.8% indeed in November 2023 compared to 22.3% in the previous year period. The growth can be attributed to relatively higher sales in the festive season and an increase in the vehicle market.
Outstanding credit card continued to rise in November 2023 reaching Rs 2.4 lakh crore, a year-on-year growth of 34.2%, remaining at the same level sequentially. Meanwhile, credit card transactions declined after the festive season drew to a close, which can be seen through the consecutive drop in online payments. However, the point of sale or PoS transactions witnessed an increase. The credit card segment could see some moderation after the RBI increased the risk weights.
The other personal loans reached 12.96 lakh crores and increased by 24.3% indeed due to the festival season, growing trend in small ticket size loans and faster turnaround due to digitization. However, growth rate is likely to moderate due to RBI’s move to increase the risk weights on consumer loans.
Services and industry
Services segment reported an increase of 25.4% indeed in November 2023 (higher than 23.6% in October 2023) due to continued growth in business, commercial real estate and Non-Banking Financial Services (NBFCs) (lower compared to previous period). Without considering the merger, it also reported a robust growth of 21.9% yoy against 21.3% a year ago. Industry moderated to 6.6% indeed in November 2023 from 13.0% during the year-ago period due to slower growth in Micro, Small and Medium Enterprises (MSME) and marginal growth in the infrastructure segment. Additional gross bank credit rose 14.2% in November 2023. Excluding the merger (at 10.0%), it was higher by about 112 bps from 8.9% more than a year ago.
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