Credit bureaus appear to be helping banks take cautious lending decisions where loans are not backed by collaterals. Although personal loans, which are offered without any security, rose more than a quarter in the three months to September, delinquencies are still the lowest at 0.5%, a study by credit bureau Transunion Cibil showed.
According to the study, personal loan accounts of both banks and shadow banks combined rose to 15 million, showing a 26% increase on-year. These are small-sized loans, in the range of Rs1-5 lakh, and even their tenure is less than five years. The number of credit card accounts increased by about 32% from last year to 36.9 million in the third quarter of 2018. Credit card accounts typically have outstanding less than Rs1 lakh per account.
The study notes that the average balance per borrower is Rs2.52 lakh, up 7.7% over the previous year. The serious delinquency rate is 0.52%, down one basis point over the previous year. Serious delinquency rates are measured as the percentage of balances that are 90 or more days past the due date.
Significantly, the delinquency rate in personal loans or unsecured loans is the lowest among all retail loan products analysed in the study. Delinquency rate for loans against property is the highest at 3%, followed by the auto loans segment which has a delinquency rate of 2.75%.