Tag: business loans

India’s lending market doubles in last five years on personal loans boom, BFSI News, ET BFSI

Personal Finance

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India’s loan market has doubled in the last five years — fiscal 2017 to 2021 — to Rs 156.9 lakh crore, according to a report.

“Over the last five years, retail, microlending and commercial lending portfolios have witnessed an increase by 91%, 157% and 93%, respectively. Retail and commercial lending contribute 49% each to total lending in India and microfinance contributes to 2% of the overall lending pie,” CRIF High Mark, a credit bureau, said its How India Lends, FY 2021 report.

The loan matrix

The overall personal loans portfolio witnessed 2.3X growth in originations by value and 3.8X by volume from FY17 to FY21 while the same for small-ticket personal Loans is 3X growth in originations by value and 11.5X by volume, it said

Credit Cards witnessed 2.4X growth in New Card originations from FY17 to FY20 followed by a drop in FY21.

Auto loans

Two-wheeler loan books saw 1.8X growth in originations by value and 1.2X growth in originations by volume.

Auto loans portfolios recorded 23% growth in originations by value from FY17 to FY19 followed by a de-growth in FY20 and FY21.

For the same period, home loans portfolio observed 32% growth in originations by value and 15% growth. Affordable Home loans grew by 17% in originations by value and 6% by volume

Business loans witnessed 17% growth in originations by value from FY17 to FY20, followed by almost 2X Y-o-Y growth in originations by volume from FY20 to FY21.

Navin Chandani, MD & CEO, CRIF High Mark, said, “Our report, How India Lends – FY21, is an attempt to highlight the credit trends in India, from FY17 to FY21. Lending Institutions and the policymakers could benefit from the report and collaborate to promote a favourable lending environment. As the development of credit spurs economic growth, we are committed to study and publish reports that will benefit the lending ecosystem.



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Ettutharayil Group acquires Delhi-based NBFC BKP Commercial India

Banking & Finance

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Ettutharayil group, the Kayakulam-based financial services firm providing business loans for the past two decades, has acquired New Delhi-based non-banking financial company BKP Commercial India.

With the acquisition, the group which currently operates in savings, insurance and investment sectors, will branch out into vehicle loans and various other secured loans, including loans against property and gold loans.

Priya Anu, Managing Director, BKP Commercial, said in a statement that the company would open new branches within and outside Kerala. At present, Ettutharayil has 14 branches in Kerala, while BKP will open 15 more branches in 2021. Of these, five branches are expected to be functional within three months.

The company’s first branch in Kerala was inaugurated by Kochi Mayor M Anilkumar. BKP Commercial targets to disburse loans worth around ₹60-70 crore in 2021-22.

Anu said that BKP would focus on technology-based loan instruments catering to customer requirements. Given the sluggish market conditions prevailing in the Covid-19 pandemic situation, BKP has launched doorstep gold loans for senior citizens and working women. Another product launched is online gold loan that provides customers the safety of keeping their unused gold ornaments in BKP’s lockers with insurance cover and avail loans as and when required for up to 75 per cent LTV.

BKP has also launched Salary Bridge Loan in association with employers having 10 or more employees. The Digi Passbook Business Loan targets small and medium traders offering short-term loans for business purposes based on the volume of their digital transactions.

She added that the company has recently concluded a rights issue and is currently raising part of their fund requirements through an NCD issue.

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Mudra loans tide over Covid-19 blues

Banking & Finance

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The disbursal of small business loans under Pradhan Mantri Mudra Yojana (PMMY) has almost come out of Covid bluesand may match last fiscal’s figure, going by the current trend.

With one month left for the closure of the current financial year, loans worth ₹2,32,594 crore have been sanctioned as on February 19, 2021, of which, ₹2,19,107 crore has already been disbursed.

In the previous fiscal, total sanctioned loans under Mudra, as on February 20, 2020, stood at ₹2.77-lakh crore.

PMMY is a scheme of the Centre to provide loans of up to ₹10 lakh to non-corporate, non-farm small/micro enterprises. These loans are classified as Mudra loans under PMMY.

These collateral-free loans come in three categories – Shishu (up to ₹50,000), Kishore (between ₹50,000 and ₹5 lakh) and Tarun (₹10 lakh).

Small business loans sanctioned under the PMMY have exceeded the target set for the financial year ended March 31, 2020, at ₹3,37,495 crore.

“Given the fact that banking operations and business were impacted for a significant period of almost two quarters, the present performance of Mudra loans is certainly beyond initial expectations,” a senior official with Union Bank of India, told Business Line.

Reverse migration

The reasons for the steady demand of Mudra loans are varied. According to a senior SBI official, loss of jobs in urban areas due to pandemic-induced circumstances has resulted in reverse migration to rural- and semi-urban areas. “Some of the people are now setting up small business to make a living and PMJY is facilitating this,” he said.

As part of the economic stimulus package, Atmanirbhar Bharat Abhiyaan, the government had also announced interest subvention scheme for Shishu loans.

Under this scheme, loans are given interest subvention of 2 per cent for 12 months from May 2020, which has made these advances more affordable for petty entrepreneurs, say bankers.

Bankers, however, are tight-lipped over the quantum of Non-Performing Assets (NPAs) under Mudra loans in the current financial year. The clear picture on bad loanswill only emerge only after the closure of the current financial year, they say.

As per government data, NPAs in 2019-20 were at 4.80 per cent of the total loans disbursed.

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