Retail credit growth moderated in Q1 as lenders tightened personal loans supply: TransUnion CIBIL

Retail credit growth moderated in the first quarter as lenders tightened personal loan supply even as the share of loan originations for new-to-credit (NTC) consumers hit a record low, according to a TransUnion CIBIL report.

Year-on-year (YoY) growth in originations shows that in terms of value, while two-wheelers saw a robust 19 per cent growth, credit cards de-grew 21 per cent, per the “Credit Market Indicator” (CMI) report.

Home and personal loans did not see any growth in value terms. Loans against property and auto loans recorded 6 per cent growth each. Consumer durable loans were up 7 per cent.

“Credit card originations showed a decline by 30 per cent YoY, while home loan originations dropped by 9 per cent in volume,” the report said.

The share of NTC consumers in originations dropped from 16 per cent in the quarter ending June 2023 to 12 per cent in this quarter. The share of loan originations for NTC consumers has declined consistently over the past five years, the report said.

TransUnion CIBIL assessed that the share of prime and above has increased to 55 per cent (from 54 per cent a year ago); higher upgrades in the near prime segment indicate improved consumer behaviour.

CMI value for demand at 95 show a slight downward trend since June 2023 (at 98) due sluggish demand.

Rajesh Kumar, MD and CEO of TransUnion CIBIL said: “Timely regulatory guidance and given the relatively high credit-deposit ratio, we are witnessing a moderation in retail credit growth.

“Lenders can now look at identifying pockets of deserving consumers across risk segments to provide access to credit for them while driving the next phase of sustainable retail credit growth.”