Delinquencies Have Gone Up in Unsecured Loans, Especially in Small Ticket Size Personal Loans: Nomura
IANS 20 November 2023
Data and management commentaries across non-banking finance company (NBFC)/banks suggest rising delinquencies in unsecured loans, especially in small ticket size personal loans (STPL), less than Rs50,000, and loans sourced via fin-tech partnership, foreign brokerage Nomura said in a report.
 
About 25% of incremental origination by volume over the past two years came from small ticket personal loans (STPL), but it accounted for only 2.5% of system PL by value.
 
Further, In the June 2023 quarter, 51% of borrowers who had taken small ticket personal loan already had more than four credit products at the time of taking another new loan (17% in June 2019 quarter).
 
Increase in delinquencies in STPL is unlikely to create issues at the system level. However, it should negatively impact some mid/small-sized NBFCs that have grown rapidly in this segment over the past few years and have significant exposure to unsecured loans.
 
Around 25-30% of incremental loan growth for NBFCs during FY22-2Q24 came from unsecured loans and hence rising delinquencies should negatively impact NBFC’s loan growth first, Nomura said.
 
Further, if stress continues to rise in unsecured loans, the credit cost trajectory for NBFCs in FY25 would be higher than historical trends and may negate the expected positive impact of repo rate cuts on the cost of funds, it added.
 
In line with earlier quarters, NBFCs continued to grow faster than system/banks in unsecured loans in Q2 due to elevated competition in secured segments. During FY22 to Q2 '24, NBFCs’ unsecured loans grew 75% vs 45% for the overall system.
 
The total AUM of these 13 NBFCs registered growth of 24% y-o-y in Q2 '24 (37% in FY22-Q2 '24), out of which the PL portfolio grew at a faster pace of 51% y-o-y in Q2 '24.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
Comments
Delhi court rejects SBI's suit against deceased loan defaulter, emphasises on Bank's proactive responsibility
IANS 17 November 2023
A Delhi court has dismissed a suit filed by the State Bank of India (SBI) for the recovery of Rs 13.51 lakh, along with interest, against a loan defaulter, who had passed away.
 
District Judge Surinder S. Rathi stressed on...
How to Choose the Right Personal Loan App: Your Ultimate Guide
Sponsored Post 03 November 2023
Personal loan apps have emerged as a versatile and easily accessible solution to meet various monetary requirements. Whether you need funds for unforeseen medical expenses, a home makeover project, or that long-awaited dream...
How to buy an iPhone on EMI without a Credit Card?
Sponsored Post 30 October 2023
The ever-popular iPhone is undoubtedly one of the highest-selling phones in the high-end segment market. Its cutting-edge technology and sleek design make it more than just a smartphone. However, the hefty price tag often makes it...
Calculating Your 25 Lakh Home Loan EMI: A Step-by-Step Guide
Sponsored Post 17 October 2023
Embarking on buying your dream home is thrilling, but understanding the financials can often be confusing, especially if you are on this journey for the first time. "How will my monthly payments look for a 25 lakh home loan EMI?" –...
Free Helpline
Legal Credit
Feedback