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India’s retail loan volume grows to near commercial loan share in lending market, study shows

India’s retail lending space has evolved as a major driving force behind economic expansion with the volume of retail loans — including housing and vehicle loans –now coming neck to neck with the volume of commercial loans.

The size of the total lending market in India has grown to Rs 174 lakh crore at the end of March, with retail loans contributing 48.9%. The share of commercial loans was at 49.5% and the balance 1.6% was contributed by microfinance, according to a study by credit bureau CRIF High Mark.

Retail loans grew 13.6% in FY22 to Rs 85.2 lakh crore, outpacing both commercial loan growth and microfinance loan expansion. Commercial loans grew 8.6% to Rs 86.3 lakh crore. Microfinance grew by 10% to Rs 2.9 lakh crore.

Overall, FY22 witnessed 11% growth in new loan originations across retail, microfinance and commercial loans.

The study captured the lending by both banks and non-banking finance companies.

“India’s credit sector maintained an accelerated growth trajectory despite unprecedented challenges arising due to the second wave of COVID-19. This resurgence in the credit landscape signals economic recovery and is extremely encouraging,” said Sanjeet Dawar, managing director at CRIF High Mark.

A bulk of the retail loans in value terms comes from the home loan segment with its portfolio outstanding at Rs 25.5 lakh crore contributing nearly 30% of the retail lending universe.

By count of active loans, credit cards dominated the market with a share of 17.2%, followed by personal loans (14.1%), agri loans (11.8%), consumer durable loans (11.3%) and gold loans (11%). The count of home loans was just about 3.3% while the auto loans constituted the least share of 2.9%.

The study showed that public sector banks enjoyed the highest market shares in both home loan (41%) and personal loan (42.3%) segments while private banks had 19.6% and 37% share respectively. Housing finance companies with 35.8% market share were second in home loan outstanding after public sector banks.

Public sector banks (35.6%) and their private peers (37.4%) were almost neck to neck in auto loan market share. Two-wheeler loan segment was however largely dominated by non-banking finance companies which enjoyed 64.4% market share followed by private banks’ 30.1%, the report called `How India Lends’ showed.

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