Of 220mn credit-worthy consumers, only 72mn tapped by banks: Report
What's the story
Even after the increased focus on retail lending for a decade, banks and other lending institutions have been able to tap only a third (72mn) of the estimated 220mn credit-eligible consumers, a report by credit information company TransUnion CIBIL said.
The missing 150mn include those who qualify the lending criteria from income and age perspective but are currently inactive or dormant.
Here's more.
Saturation point
Has retail lending reached a saturation point, asks Yogendra Singh
The untapped segment promises retail-lending opportunities for lenders through products such as credit cards, personal loans, and consumer durable loans, the report said, adding it will also give as a "major boost" to the economy.
Yogendra Singh, VP of Research-and-Consulting, CIBIL, said, "Banks have been tapping retail segment for over 10 years, leading many observers to question if retail-lending is reaching a "saturation point".
Concerns
RBI raises concerns on retail loans
Reserve Bank of India has been flagging concerns on retail loans being the panacea for banks, which are saddled with reverses on the corporate lending side.
"This is not a risk-free segment and banks shouldn't see it as grand panacea for their problem-riddled corporate loan book. There are risks here too that should be properly assessed, priced and mitigated," Deputy Governor NS Vishwanathan said.
Participants
People in 20-69 years age group took part in survey
The survey was conducted on people in 20-69 years age group and with income over Rs. 2.5L annually.
The report forecasts the addressable market will increase by 14-16 million consumers per year, reaching an estimated 295 million by 2022.
It also said total household debt in India can nearly double to Rs. 78-94 lakh crore by 2022, from Rs. 37 lakh crore last year.
Quote
More people will seek credit help: Yogendra Singh
"As more consumers reach adult age and have disposable income, they will increasingly seek credit to help finance purchases of housing, vehicles, and household goods. As well, in an increasingly digital marketplace, they will want credit cards to help facilitate online transactions," Singh said.