Youth driving loan growth; max expansion in riskier segments: Report

The youth is driving the credit demand in the country, but a lot of the credit growth is being driven by segments which are generally considered risky, a credit information company said in a report on Thursday.

The youth is driving the credit demand in the country, but a lot of the credit growth is being driven by segments which are generally considered risky, a credit information company said in a report on Thursday. Data for the September quarter released by TransUnion Cibil said those in the 18-30 year-old age group accounted for the largest proportion of inquiries at 43 per cent as against 38 per cent a year ago.

''This trend is underlined by rapid growth in consumption-led credit products like credit cards, consumer durable loans and personal loans,'' the credit information company said. Personal loans and credit cards are unsecured loans which generally have higher non-payment rates, while consumer durable loans are typically for depreciating assets. Banks typically take such credit calls depending on analytics like regular cash flows and past repayments.

The report said the 90-day overdue rate in credit cards was 2.23 per cent, consumer durable loans at 1.91 per cent and personal loans at 1.02 per cent. The auto loan segment showed the least stress at 0.95 per cent, while that for loans against property, typically taken by small business persons, was the highest at 2.78 per cent. ''Increased access to credit opportunities for younger borrowers has direct correlation to improvement in the quality of life and financial empowerment of India's youth, who are the drivers of the country's economic engine,'' the company's managing director and chief executive Rajesh Kumar said. From a growth in outstanding balances perspective, consumer durable loans showed a 67 per cent increase, credit cards 28 per cent and personal loans were up by 32 per cent, the report said. The report said the Credit Market Indicator (CMI), which shows retail lending health, reached a level of 100 in September 2022 and the health has improved across all the major states.

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