Overall retail lending delinquencies (90 days overdue) stood at 1.52 per cent for the entire portfolio at the end of 2015, according to the Equifax’s India Consumer Credit Trends. Of the retail loans, agriculture and business loans contributed the most to the delinquencies, with a share of 2.64 per cent and 3.23 per cent respectively, said the report.
Overall retail loans increased by 17 per cent in 2015. While public sector and cooperative banks saw a drop in market share, private banks, housing finance companies and non-banking finance companies saw an increase.
Public sector banks saw a drop in market share due to lower growth in agriculture and gold loans. On the other hand non-banking finance companies (NBFCs) gained due to increase in auto, business and consumer loans.
A break-up of delinquent loans based on the kind of loans showed that mortgage loans had the lowest delinquency rate at 0.56 per cent. Agriculture and business loans accounted for 33 per cent of the delinquent portfolio, though they had a share of only 17 per cent of the total retail loan portfolio.
“Business loans are increasing in share to total retail loans, but delinquency is also higher. However, the higher interest rate compensates for the delinquencies,’’ said Manish Sinha, Equifax India Country Leader.
Public sector banks accounted for 63 per cent of the total delinquent portfolio as of year-end 2015 mainly contributed by agriculture and business loans. This was followed by NBFCs at 16 per cent. “NBFCs in the recent past have done more lending in commercial vehicle, auto and business loans and all three have higher delinquencies than the national average,’’ said Sinha.
On a geographical basis, Maharashtra, Tamil Nadu, Karnataka, Madhya Pradesh and Andhra Pradesh and Telangana saw the highest growth in retail loans.
Odisha had the highest delinquency, driven by higher agriculture and business loans at 7.15 per cent and 8.55 per cent respectively.
The state also saw a high rate of mortgage delinquencies at 1.33 per cent compared to the industry average.
Since December 2015, there has been an improvement in delinquency levels, Sinha added.