“It is clear there is still significant demand for credit amongst Indian consumers, with enquiries increasing 40 per cent year-on-year in CYQ4 2018. However, supply has not quite kept pace and approval rates have displayed a consistent declining trend from Q1 2017 onward,” said Yogendra Singh, Vice President of data science and analytics, TransUnion CIBIL.
The growth rate of unique consumer enquiries for retail lending products has accelerated from 26.8 per cent in Q2 2018 to 36.2 per cent in Q3 2018, in contrast to aggregate origination trends as well as the economic growth trends. Aggregate approval rates have come down from 43% in Q3 2016 to 40.3% in Q3 2017 and further on to 33.9% in Q3 2018.
“This effect is driven by an increasing percentage of non-prime, higher-risk consumers entering the credit marketplace, and shows lenders are actively managing their risk exposure and thus the profile of their overall portfolio,” said Singh.
The improving risk management is reflected in stable or declining delinquency rates for most retail products, said CIBIL.