Easy credit piling up leverage: BCG study

The leverage of retail customers is on the rise with credit expansion reducing the number of ‘new to credit’ customers. As more customers are brought into the credit fold, the pool of potential new customers shrinks.

Among the customers taking a new loan in 2017, 40 per cent had two or more existing loans (35 per cent in 2015) and 30 per cent had more than Rs 1 lakh outstanding balance on existing loans (25 per cent in 2015), says a report by the Boston Consulting Group. 

 

While the share of gold loans in total loans saw an increase, its ticket size reduced significantly. Personal loans showed the highest increase in ticket size, followed by home loans, two-wheeler loans, and auto loans. The share of the younger population in retail credit is also on the rise. While delinquency rates in retail books were stable, home loans and auto loans saw an uptick. 

Public sector banks and housing finance companies also saw a rise in their delinquency rates, while the industry delinquencies were stable, the report says.