Lenders wary of new credit customers, says Cibil report

Lenders appear to be wary of serving New To Credit (NTC) customers and showing more preference towards existing borrowers, according to a report released Wednesday.

Credit demand continues to pick up even after the end of the holiday season, but appears to be driven more by consumption and riskier personal lending, and not translating into asset creation, said rating agency Transunion Cibil in the report.

For the three months ended November 2021, NTC’s share of origination volume slipped to 14% of customers, from 16% a year ago and 17% before the pandemic hit in 2019, it said. -he declares.

“Lenders are approaching the New To Credit (NTC) consumer segment with caution,” the report said.

Regarding loan approval rates, the NTC segment saw a decline to 27% from the previous year’s level of 30%, while the existing credit segment also saw a drop to 29%. against 31% in the period a year ago.

Credit demand continued to grow, with application volumes for durable consumer loans increasing by 97% and personal loans by 80%, according to the report.

Early data suggests that the increase in demand has continued beyond the holiday season and into the new year as well, with demand volumes up 33% in January 2022, compared to a drop of 10% year-on-year, he said.

It can be noted that the consumer lending segment includes the riskier products of personal loans and credit cards, as well as durable consumer purchases such as mobile phones which depreciate assets.

From a loan quality perspective, two-wheeled loans showed a spike in asset quality issues with a 1.40% jump in loans over 90 days past due to 3.64% while cards credit showed an improvement from 0.77% to 2.22%, the data showed.

Collection efficiency for lenders is better than a year ago but still below pre-pandemic levels, he said.

The Credit Market Indicator (CMI) improved to 91 points for the three months to November 2021, up 4 points from its August 2021 levels, it said, adding that it now indicates stability in the retail credit market.

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

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