Personal loans segment grew at 30.1% in Nov 2023: CareEdge

Personal loans growth: The personal loans segment, the largest segment with  34 per cent share, witnessed a robust growth of 30.1 per cent in November 2023 driven by the impact of the HDFC merger, festival demand, growth in credit card outstandings, other personal loans, housing loans, and vehicle loans, a recent report by CareEdge said. 

“Credit growth in the personal loans space continues to also be driven by miniaturisation of credit, increased use of credit bureaus for faster decisions and an increase in ecommerce transactions. Within the personal loans segment, all major sub-segments witnessed strong demand during the month,” the report added further.  If we consider the growth excluding the merger, it marginally moderated to 18.6 percent in November 2023,  as compared to 19.9 per cent y-o-y in November 2022. 

Other Segments

Housing loans grew by 37.0 per cent YoY compared to 16.6 per cent a year ago mainly due to the merger (reclassification of HDFCs’ advances) and sales of high value residencies. The rise in interest rates has a larger impact on affordable housing as this borrowing class faces the additional burden of elevated rates. 

Vehicle loans registered a robust growth of 20.8 per cent YoY in November 2023 as compared to 22.3 per cent in the yearago period. The growth can be attributed to comparatively higher sales in the festive season and premiumisation of the vehicle market. 

Credit Card outstanding continued to be elevated in November 2023 reaching Rs 2.4 lakh crore, a YoY growth of 34.2 per cent, while staying at the same level sequentially. 

Meanwhile, the credit card transactions declined after the festive season neared its end, which can be seen by the sequential drop in online payments. However, the point of sale or PoS transactions have witnessed an increase. The credit card segment might see some moderation after the RBI increased the risk weights. 

The other personal loans reached Rs 12.96 lakh crore and rose by 24.3 per cent YoY on account of the festival season, a rising trend in small ticket-size loans and faster turnaround due to digitalisation. However, growth rate is likely to moderate given RBI’s action of increasing the risk weights on consumer loans. 

The credit exposure of banks to Non-Banking Financial Companies (NBFCs) stood at Rs 14.9 lakh crore in November 2023, indicating a 21.5 per cent year-on-year YoY growth. 

This expansion is indicative of the robust progress observed in NBFCs during the post-pandemic period.