The ongoing economic slowdown may have resulted in banks recording solid increases in the disbursement of personal loans, data released by the Reserve Bank of India (RBI), banks and analysts show that this rise has not extended to the vehicle loan category.
According to Centrum Research, while personal loans grew 16.4 per cent year-on-year during the month of November 2019 compared to 17.2 per cent during October 2019. However, while housing loans and other personal loans grew 18.3 per cent and 21.1 per cent, respectively, vehicle loans only grew 4.7 per cent compared to 5 per cent a month ago.
“On the retail side (in calender year 2019), auto loan growth has been muted, while unsecured and under-penetrated segments such as credit cards and personal loans continue exhibiting robust trends. This is indicative of significant cross-sell opportunities. Regarding auto trends, we noted from our discussion with banks that commercial vehicle loan growth will remain tepid for the next few quarters, while growth in other auto segments will revive gradually,” said analysts from Motilal Oswal Financial Services in a recent note.
The less-then-impressive growth in automobile loans comes even as banks have begun recording a shift in preferences toward more consumer-focused borrowing.
“Flattening demand for large-ticket asset purchases is causing slower asset finance loan originations, while consumers may be increasingly turning to consumption credit products to help finance day-to-day living expenses. This shift in consumer credit demand warrants ongoing monitoring to understand the impact on lender portfolios,” says Abhay Kelkar, vice president of research and consulting for TransUnion CIBIL.
According to the credit tracker, the lending categories which recorded highest growth during the third quarter of 2019 were credit cards and personal loans, which grew by 40.7 per cent and 28 per cent respectively.
However, moderate rates of growth were witnessed in auto loans (10.3 per cent), loans against property (11.6 per cent) and home loans (10 per cent) respectively.