Home / Companies / News /  Indian lenders’ retail loan book size to double in 5 years to 96 trillion: ICICI Bank-Crisil study

The total size of retail loan book of Indian lenders is expected to double to 96 trillion in five years, said a joint report by ICICI Bank and Crisil on Tuesday. The total size of retail loan book stood at 22 trillion in FY14 and at 48 trillion in FY19.

The growth in the loan book will come on the back of increased demand for private consumption (namely home, car, consumer durables, credit cards etc), willingness of consumers to take loans, increased availability of various consumer data, improved usage of data analytics and regulatory initiatives propelling growth in low cost housing loans and micro, small & medium enterprises (MSME) loans, according to the report.

Meanwhile, since corporate credit has been on a slowing trajectory for the past few years, most banks have relied on smaller loans to grow their loan books. RBI data showed that credit to industry grew 3.4% year-on-year (y-o-y) to 27.86 trillion on 25 October but since the beginning of this financial year, it was down 3.4% as well.

The report cited above is based on interviews with 200 experts from the retail loans industry, ICICI Bank and Crisil’s expertise and data from publicly available databases.

Credit cards and personal loans (both unsecured credit) with a compounded annual growth rate (CAGR) of 23% and 22% between FY19 and FY24, respectively, will be the drivers of the retail loan growth, it said. The other high-growth area will be consumer durable loans at 21% CAGR, albeit on a low base of 24,000 crore. The ICICI Bank-Crisil report assumes a gross domestic product (GDP) growth rate of 6.5-7% over these five years for the loan growth prediction.

Anup Bagchi, executive director, ICICI Bank said the reason why these segments are going to grow at 22-23% is because customers typically start with unsecured products and then as they are able to put in equity, move to secured loans.

“In the initial period, people generally start with a credit card and personal loan. Whenever we would have started with our jobs, we would start with unsecured credit and it does not mean we are bad credit," said Bagchi when asked about concerns on the unsecured portfolio for all lenders growing faster than the rest of their book.

Meanwhile, digital lending – defined as cases where loans are sourced, underwritten, and sanctioned digitally – is estimated at Rs. 2.7 trillion as of March 2019. The report said digital lending, which accounts for 5.7% of the retail loans, is expected to move to 15.8% by FY24.

Amish Mehta, chief operating officer and president, Crisil said growth is expected to be higher in smaller cities outside the top 50 cities.

“The top five players are foreseen continuing their dominance of the market, across asset classes. For example, in housing loans, despite the market having over 100 players, the top five players alone have a cumulative market share of over 50%," said Mehta.


Shayan Ghosh

Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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