Demand for two wheeler and consumer durable loan hit the most since demonetisation

MUMBAI: Consumer loan demand for two-wheeler and consumer durable loans has seen significant drops since the Nov. 8, 2016 demonetisation announcement, according to a new analysis by TransUnion CIBIL. At the same time, demand for other consumer loan types, including credit cards and auto loans, have crept up through Dec 2016, after a sharp decline that was the immediate response to the announcement, it said.

Prior to November 08, credit demand was growing at an average 35% on an annual basis across all loan products, with significant year-over-year growth in demand for consumer loans (up 71%) and credit cards (up 41%). This growth was seen broadly across the spectrum of lenders.

TransUnion CIBIL study indicated a broad-based growth across all geographies and were accompanied by historically low non-performing asset (NPA) rates as banks instituted strong, data-driven risk management practices.

“In the week after the demonetisation announcement, TransUnion CIBIL saw a significant decrease in new credit demand, with the focus for both consumers and bankers being cash exchange and collections” said Ms. Amrita Mitra, Vice President- financial services research and consulting at TransUnion CIBIL. “Two-wheeler and consumer durable loans, usually serviced by Private Banks and NBFCs, were most negatively impacted—significantly in key geographies like Maharashtra, Gujarat, Andhra Pradesh & West Bengal.”