Unsecured bank loans rise four-times in FY15-18: Report


Team Udayavani, Jul 4, 2018, 5:27 PM IST

Mumbai: Banks’ unsecured loan book has grown four times the bank credit during the past three years, helped by a rise in discretionary spending, technology-driven disbursements and lower interest rates, says a report.

Unsecured loans are the loans where individual exposures are smaller and more distributed and given without any collaterals but banks get higher margins. Typically personal loan, education loans and credit card spends fall under this category of loans.

“Between fiscals 2015 and 2018, unsecured credit – comprising personal, small and medium enterprise (SME), and credit card loans – clocked a compound annual growth rate (CAGR) of 27 per cent, or almost four times growth in bank credit,” Crisil said in a report today.

As of March 2018, outstanding unsecured loans stood at around Rs 5 trillion, accounting for 26 per cent of retail lending, compared to 21 per cent three years ago.

Growth in unsecured loans is on account of a surge in discretionary spending, increased availability of customer data, faster disbursements driven by technology, and lower interest rates in some segments.

The report said financiers are expected to focus more on this segment due to attractive yields.

Return on assets are 2.5-3 per cent for personal and SME loans, and 3-4 per cent for credit cards, compared to under 2 per cent for home loans and new passenger vehicle loans, it said, adding rising competition has led to lower rates in some segments such as personal loans.

In unsecured SME loans, rates have remained sticky, but average tenure and commissions paid to direct selling agents have increased, it said.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

21 women among 288 winning candidates in Maharashtra; only 1 from oppn side

Main accused in Delhi Police constable murder shot dead in Sangam Vihar

COP29: India rejects new USD 300 billion climate finance deal

Maharashtra Assembly Elections 2024 | Congress chief Nana Patole scrapes through in Sakoli, wins by 208 votes

Waqf land dispute: Kerala CM assures no body will be evicted from Munambam

Government launches Haj Suvidha App 2.0 for ease of pilgrims

VHP’s saint congregation resolves to fight against ‘Waqf Board land claims’

Related Articles More

Sena vs Sena: Shinde’s party defeats Uddhav’s outfit in 36 constituencies, loses in 14

21 women among 288 winning candidates in Maharashtra; only 1 from oppn side

Main accused in Delhi Police constable murder shot dead in Sangam Vihar

Maharashtra Assembly Elections 2024 | Congress chief Nana Patole scrapes through in Sakoli, wins by 208 votes

Waqf land dispute: Kerala CM assures no body will be evicted from Munambam

MUST WATCH

Prakash Belawadi

Naxal Leader Vikram Gowda

Christmas Cake Fruit Mixing

DK Shivakumar

Rose Cultivation


Latest Additions

Sena vs Sena: Shinde’s party defeats Uddhav’s outfit in 36 constituencies, loses in 14

21 women among 288 winning candidates in Maharashtra; only 1 from oppn side

Myntra pilots foray into quick commerce with ‘M-Now’ in select locations of Bengaluru

K’taka Bypoll Debacle: BJP’s organizational and strategic failures spark leadership questions

19 injured in serial road accident in Uppinangady 

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.