Retail loan market doubles in 2 years

The composition of banks' retail loan portfolio seen skewed towards home loans.

The retail loan market has grown by over 100 per cent in the last two financial years -- from Rs 44,100 crore in 2001-02 to Rs 100,000 crore in 2003-04 -- and is expected to touch Rs 134,000 crore by March 2005.

A recent ICICI Bank-AC Nielson ORG Marg survey on retail spending says the composition of the banking system's retail loan portfolio is largely skewed towards home loans, but the share of automobile and personal loans is on the rise.

The proportion of home loans was close to 47 per cent in 2003-04 while the shares of automobile and commercial loans were around 19 per cent each. The share of personal loans stands at around 10 per cent of the total retail loan portfolio.

"In the last few years, the rapid growth of banks' branch networks, easier documentation and prompt delivery have contributed towards the easy availability of retail loans," said the retail head of a leading private sector bank.

Easy access to cheap credit had also fuelled consumer spending and helped the growth in retail activities, he added.

The research also reveals that Indian consumers prefer to use plastic money to payments for shopping and eating out. The credit card base on September 2004 stood at 11.94 million against 0.3 million in 1990. In 2004-05, credit cards will account for a spending of Rs 2,000 crore per month, with the average card spending per month at Rs 1,659, says the study.

The average credit card spending has increased to Rs 984, up 37 per cent in 2003 from Rs 721 in 2002.

Between 2001-02 and 2002-03, the share of credit card spending in the metros has been significant in shopping: a jump from 9 per cent to 21 per cent, says ICICI Bank Property Services Research.