Retail credit inquiries up 54% in Feb-October, shows data

Retail credit inquiries up 54% in Feb-October, shows data

Inquiries for consumer loans rose 54 per cent in the February-October period as India’s economic activity picked up, driven by demand during the festive season.

According to data from TransUnion CIBIL, the number of inquiries has decreased by 12 per cent as compared to the same period last year.

With the revival of public sector banks, consumption products including personal loans, credit cards and consumer durable loans are showing increased demand. There is a comparable increase in consumer demand relative to supply.

TransUnion CIBIL Managing Director and CEO Rajesh Kumar said lenders quickly adapted to change through digital channels, which has become the new normal in the pandemic. Kumar said they have managed to do this by adopting strategies to keep the risk within acceptable limits.

The credit market indicator (CMI) rose from 78 in February to 87 in August, indicating that consumer credit health has improved. The CMI is a measure of tracking consumer credit health trends that summarizes movements among demand, supply, consumer behavior and performance metrics in one indicator over time.

CIBIL said the latest CMI of 87 in August indicates the resilience of India’s credit market, which is back on a growth trajectory despite the impact of the second wave of the pandemic.

CMI is not a static index. Therefore, the level itself is not an indication of credit health. The CMI number should be viewed in relation to the previous period(s) and not separately.

A lower CMI number than in the previous period represents a decline in relative credit health, while a higher number reflects an improvement. The most obvious impact on the health of the retail credit market was in the first few months of the pandemic in 2020. But, overall, the market has become increasingly resilient as the pandemic progresses. Between February and May 2020, the CMI fell by 17 points from 100 to 83.

The second wave of the pandemic had a significant impact on the nation as a whole. However, the retail loan market was more resilient as lenders adjusted their business models and became better equipped to respond.

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