The Low Cost Personal Loans (STPL) segment saw a huge increase in asset quality strains for lenders in the pandemic-hit FY21, with non-bank financial corporations (NBFCs) the hardest hit , according to a report released Thursday.
Delinquency rates for loans overdue between 30 and 180 days soared to 12.7% in March 2021, from 8.2% a year earlier and just 4% at the end of March 2019, according to data released by CRIF High Mark, a credit reporting company, said.
Since the start of the pandemic, concerns have been expressed about personal loan portfolios due to the impact on income generation in a fiscal year that saw the economy contract 7.3%. The regulator reacted by first declaring a moratorium, then by introducing a restructuring mechanism also for low-cost loans.
NBFC default levels stood at 14.8% on STPL, followed by 5.6% for private sector banks, while the ratio of state-run lenders was only 1.5 %.
The overall outstanding portfolio amounted to Rs 13,600 crore with 1.46 crore of active loans in March 2021. During fiscal year 21, STPL recorded creations of Rs 13,500 crore in value and 1, 48 crore volume account with an average ticket size of Rs 9,100, according to the report.
There is a 42% drop in the average STPL note size from FY19 to FY21 due to the focus on small note lending by NBFCs, he said.
The STPL portfolio only accounts for 4 percent of what the bureau called the mass market segment, but contributed 62 percent of the volume.
From an asset quality perspective, he said the affordable home loan segment saw delinquencies drop to 3.2%, as well as business loans (now at 6.9%), while others like durable consumer loans, two-wheelers and commercial vehicles showed a slight increase. , the data showed.
People under the age of 25 or 26-35 account for the bulk of STPL, consumer durable and two-wheeler loans, he said, hinting that other loans like loans to businesses, affordable housing and commercial vehicles are afforded by seniors.
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