The Indian personal loan market is changing. Not all for the good

Getting a personal loan has never been easier. A few clicks are enough. Offers from banks and non-banks flood your screen. And no-cost EMIs mean your interest charges can be limited.

The result is that more personal loans are processed, smaller in size and by younger borrowers. That’s according to a study by credit bureau CRIF High Mark, which was released on Tuesday.

The number of personal loans granted per year nearly tripled between FY2018 and FY20, with the growth flattening in the current year. As of August 2020, the personal loan book stood at Rs 5.07 lakh crore, according to the report.

Borrowers are getting younger

According to CRIF data, borrowers under the age of 30 have contributed to the increase in personal loan volumes over the past two years.

While in the fiscal year ended March 31, 2018, borrowers aged 18-30 contributed 27% of the volume of loans issued, the share increased to 41% in fiscal 2019. -20. By comparison, people over the age of 40 contributed 41% of loan volume in fiscal 2018, which fell to 24% in March 2020.

In the current fiscal year, borrowers aged 18-30 contributed 31% of lending volume through August 2020, indicating lender caution.

“Observed over the past 3 years, NBFCs have continued to focus on lending to millennials and young clients under 35 with a steadily increasing share in yearly originations,” the report titled CreditScape states. “These borrowers also have an important role to play in the strong growth of the low cost personal loan market in India.”

Priscilla C. Carnegie