Bank credit to consumer durable grows 68% at Rs 5,499 crore in November

The overall personal loans segment growth marginally fell to 16.4% y-o-y in November from 17.2% a year ago.

By Hariprasad Radhakrishnan

Bank credit to the consumer durable segment saw a significant growth of 68% year-on-year (y-o-y) in November from 0.9% a year ago. This is in line with the trend of high growth since August 2019, as banks have been lending more aggressively in the segment.

Outstanding loans to the consumer durable segment stood at Rs 5,499 crore as on November 22, up from Rs 3,274 crore a year ago, data released by the Reserve Bank of India (RBI) showed. In August last year, the growth in the segment stood at 71.8% against 0.6% a year ago. Since then, a growth of around 70% has been witnessed in the segment. “This is a segment where most banks are focusing on at the moment. You are going to see this continue to trend high. Because of lower corporate credit, infrastructure issues and other factors, the avenues for banks are limited. This is one segment which is going to be strong,” said Lalitabh Shrivastawa, AVP – BFSI Research, Sharekhan.

Analysts say as the size of the segment is low, the growth numbers have seen a large jump. “The top three private sector banks have done good business on the consumer durable side,” says Kajal Gandhi, vice president – research, ICICI Direct. “In terms of value, the difference is about Rs 2,000 crore which is not big for the banking industry. The banks are trying to get into the consumer durable and unsecured loan segment, which is why growth for banks is higher, and may impact other players,” she said. However, compared to March 2019, growth in loans to the consumer durable segment fell by 12.7% in November 2019.

The overall personal loans segment growth marginally fell to 16.4% y-o-y in November from 17.2% a year ago. Advances against fixed deposits declined 7.7% y-o-y against a growth of 26.9% a year ago. Housing loans grew 18.3% y-o-y, compared to 15% a year ago.