India’s Consumption Loan Portfolio Grows by 15.2% in FY24

India’s Consumption Loan Portfolio Grows by 15.2% in FY24

India's consumption loan portfolio expanded by 15.2% year-on-year to reach Rs 90.3 lakh crore as of March 2024, according to the latest CRIF High Mark report. This growth represents a slight slowdown from the 17.4% increase observed in March 2023. The deceleration is primarily attributed to a slowdown in the home loans segment, which constitutes 40.1% of the total consumption loan portfolio by value.

The home loan sector experienced a notable deceleration, with growth slowing to 7.9% YoY in FY24, down from 23% in FY23. This slowdown is largely due to a reduction in loan originations, which grew by 9.2% in FY24 compared to 18.2% in the previous fiscal year. Origination refers to the process of creating and processing new loans.

The report highlights a shift towards higher ticket sizes, with an increasing preference for loans above Rs 35 lakh. The average ticket size has risen by 32% from Rs 20.1 lakh in FY20 to Rs 26.5 lakh in FY24.

In contrast, the personal loans segment showed robust growth, increasing by 26% YoY in FY24 despite recent regulatory changes. High-value loans of Rs 10 lakh and above saw an increased share in originations, while smaller loans under Rs 1 lakh continued to dominate in volume. Banks led in value-based loan originations, while non-banking financial companies (NBFCs) maintained a strong presence in volume-based originations.

Two-wheeler loans grew by 34% YoY in FY24, up from 30% in FY23, driven by a shift towards higher ticket-size loans. However, the overall volume of originations grew at a slower pace of 13% in FY24 compared to 32% in FY23. Auto loans also showed growth, with a 20% YoY increase in FY24, down from 22% in FY23.

Consumer durable loans experienced significant growth of 34% YoY in FY24, compared to 26% in FY23. This increase was fueled by larger ticket sizes, although origination volumes grew by only 8.5%, a sharp decline from 38.2% in FY23.

The MSME lending segment saw mixed results. Individual MSME loans grew by 29% YoY in FY24, up from 15% in FY23, while entity MSME loans grew by just 6.6% YoY, a significant slowdown from 17.2% in the previous year.

Microfinance lending also demonstrated strong performance, with a 27% YoY increase in FY24, up from 21% in FY23.

Sanjeet Dawar, MD of CRIF High Mark, commented on the report, stating, "The resilience of the Indian credit market is evident in the strong performance across various lending categories and the stability in delinquencies. While home loans remain dominant, the robust growth in personal loans, two-wheeler loans, and the resurgence of NBFCs highlight significant shifts in the lending landscape."