India's consumption loan portfolio grew by 15.2 per cent year-on-year (YoY) to Rs 90.3 lakh crore as of March 2024, according to the latest credit bureau report.
The fourth edition of CRIF High Mark report noted a slowdown from the 17.4 per cent growth recorded in March 2023, largely due to a deceleration in the home loans segment, which accounts for 40.1 per cent of the overall consumption loan portfolio by value.
The home loans portfolio saw growth slowing down to 7.9 per cent YoY in FY24, from the 23 per cent expansion seen in FY23. This was mainly due to muted growth in "originations", which increased by 9.2 per cent in FY'24 compared to 18.2 per cent in the previous fiscal year.
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Origination refers to the process by which a lender creates or initiates a new loan or credit, including evaluating, processing, and approving a borrower's application.
The report finds a shift toward higher ticket sizes, with a growing preference for loans above Rs 35 lakh, although the average ticket size (ATS) rose by 32 per cent from Rs 20.1 lakh in FY'20 to Rs 26.5 lakh in FY24.
In contrast, the personal loans segment maintained strong momentum, growing by 26 per cent YoY in FY24 despite recent regulatory reforms. Larger ticket loans of Rs 10 lakh and above increased their share in originations by value, while loans under Rs 1 lakh continued to dominate in volume.
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Banks led in value-based originations, whereas non-banking financial companies (NBFCs) remained dominant in volume.
Two-wheeler loans experienced a 34 per cent YoY growth in FY24, up from 30 per cent in FY23, fueled by a shift to higher ticket-size loans. However, the overall volume of originations grew at a slower pace of 13 per cent in FY24 compared to 32 per cent in FY23.
Auto loans, on the other hand, grew by 20 per cent YoY in FY24, compared to 22 per cent in FY23.
Consumer durable loans posted a robust growth of 34 per cent YoY in FY24, up from 26 per cent expansion in the previous fiscal. This growth was driven by a shift to larger ticket sizes, although origination volumes grew by only 8.5 per cent in FY24, compared to 38.2 per cent in FY23.
The MSME lending segment displayed mixed results, with individual MSME loans growing faster than entity MSMEs. The individual MSME portfolio increased by 29 per cent YoY in FY24, accelerating from 15 per cent in FY23, while entity MSME loans grew by just 6.6 per cent YoY, a sharp slowdown from 17.2 per cent in the previous year.
Microfinance lending also saw strong growth, with the portfolio rising by 27 per cent YoY in FY24, compared to 21 per cent in FY23.
"The resilience of the Indian credit market is evident in the strong performance across various lending categories and the stability in delinquencies. Home loans remain dominant, but the growth in personal loans, two-wheeler loans, and the rebound of NBFCs highlight significant shifts in the lending landscape," CRIF High Mark MD Sanjeet Dawar said.
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