The retail loan market in the country is estimated to double to Rs 96 trillion in five years, and emerge as the most lucrative business vertical for lenders of all hues. It grew at a compound annual growth rate of 17 per cent between FY13 and FY18, and this run rate compares to the Middle Kingdom’s 16 per cent and United States’ three per cent during the same period.
According to an ICICI Bank-Crisil report, key drivers of the exponential growth expected in the years ahead are a) consumers being more open to taking loans, b) the continuing trend of urbanisation and nuclearisation, c) the increased availability of data from both traditional and non-traditional sources, and d) financiers leveraging technology and data analytics. Plus, the fact that regulatory and legislative initiatives are propelling growth in loans towards low-cost housing; and micro, small and medium enterprises.
While concerns have been expressed of late that stress may be on the rise in the retail loan books, it is also true that lenders now have access to a plethora of data points for credit assessment and process innovations brought about by technology.