Defaults rise in loan against property

Loans against property was the only product category that witnessed a significant increase in serious delinquency rates, growing by 65 basis points (bps) year-over-year to 3.04% in Q2 2018, over the same period last year, said a report by TransUnion CIBIL. Delinquency rates rose modestly for home loans and credit cards and continued to decline for auto loans, personal loans and two-wheeler loans.

"Increased use of credit and the consequent balance growth is beneficial for the Indian consumer credit market, but maintaining relatively low delinquency rates is just as important," said Yogendra Singh, vice president of research and consulting for TransUnion CIBIL.

For the same period, retail lending balances increased by nearly 27%. Personal loan balances (up 43%) credit card balances (up 42%) grew at the highest rate of all major credit products in the last year. Average borrower balance growth for both of these credit products increased nearly 14% in the same period. Retail lending includes auto loans, used car loans, home loans, loans against property, personal loans, consumer durable loans, education loans, credit cards, and two wheeler loans.

"Balances growth was largely driven by volume (number of accounts) growth that rose at least 20% for most major credit products. The retail lending sector continues to expand strongly, as consumers are seeking credit and lenders are making credit available. With delinquency rates generally remaining at controlled levels, this points to a well-functioning consumer credit market," said Singh.