Consumer Credit in India

CONSUMER CREDIT IN INDIA
Euromonitor International
October 2016
LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Trends .......................................................................................................................................... 1
Competitive Landscape ................................................................................................................ 1
Prospects ..................................................................................................................................... 2
Category Data .............................................................................................................................. 2
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Consumer Credit: Outstanding Balance by Category: Value 20112016 ............................................................................................................. 2

Consumer Credit: Outstanding Balance by Category: % Value Growth
2011-2016 .................................................................................................... 2
Consumer Credit: Gross Lending by Category: Value 2011-2016 ............... 3
Consumer Credit: Gross Lending by Category: % Value Growth 20112016 ............................................................................................................. 3
Forecast Consumer Credit: Outstanding Balance by Category: Value
2016-2021 .................................................................................................... 3
Forecast Consumer Credit: Outstanding Balance by Category: %
Value Growth 2016-2021 ............................................................................. 3
Forecast Consumer Credit: Gross Lending by Category: Value 20162021 ............................................................................................................. 4
Forecast Consumer Credit: Gross Lending by Category: % Value
Growth 2016-2021 ....................................................................................... 4
Passport

HEADLINES
Consumer credit outstanding balance registers growth of 15% to reach Rs10,272 billion
Consumer credit continues to be dominated by mortgages/housing in 2016
Consumer gross lending in 2016 grows by 18% in terms of current value sales
Consumer credit outstanding balance is expected to grow at a constant 2016 value CAGR of
7% during the forecast period
TRENDS
Mortgages/housing in India continued to be the leading contributor to consumer credit in
2016. Mortgages grew at a CAGR of 18% during the review period of 2011-2016. This growth
was primarily driven by increased annual disposable income, which led consumers to invest
more in land and property. Indians continued to have the tendency to save and invest, and
land and property to build houses was one of the most popular investments. Also, the
government made the loan-taking process much more easily, and Reserve Bank of India cut
the reverse repo rate by 25 basis points. With this reduction in the repo rate, banks were
forced to transfer the reduced interest rates to customers. The effect of this reduction was
most prominent for the time period, as the reduction of 25 basis points led to a reduced period
of time required by consumers to pay the loan back.
The economic sentiment of the country was at a high, which led consumers to spend more.
As a result, the concept of card lending, durables lending and personal lending were more
commonly considered and opted for.
Lending became easier in 2016. Growth was driven by the easing of government regulations.
Reserve Bank of India, along with the government of India, in an effort to achieve Housing for
All by 2022 continued to work towards lowering the interest rates and making the entire
process, including the paper work, easier so that consumers from all economic classes and
education backgrounds can get loans easily. This was applicable not only for mortgages, but
for all types of loans.
The unbanked population in India continued to prefer going to Non-Banking Financial
Companies (NBFCs) for loans as they were mostly uneducated and did not have enough
knowledge or legal documentation for the process of getting a loan. However, small-time
pawn brokers and NBFCs required less paper work and therefore continued to be preferred.
COMPETITIVE LANDSCAPE
Public sector unit (PSU) banks continued to dominate consumer lending. Amongst these PSU
banks, State Bank of India continued to be the leading retail lender in the country. The bank
was and in all likelihood will continue to be the most favoured bank amongst consumers, both
rural and urban. This is because the bank offers the best interest prices, is present across the
country and has a longstanding presence. HDFC Bank Ltd and ICICI Bank Ltd were also
amongst the top retail lenders in India.
The non-traditional lenders in India, such as trade associations and payday loans, continued
to be very small and not very popular. Apart from retail lending banks, pawn brokers and gold
loan providers continued to be the most preferred alternative lending financial company.
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Reserve Bank of India is the decision-maker for all financial practices and institutions in the
country. In April 2015, it reduced the repo rate again by 0.25%. This is the interest rate at
which commercial banks can borrow from RBI. This was a continued effort by RBI to force
banks to reduce the interest rates that they charge to consumers. This helped to drive the
growth of gross lending in 2016.
PROSPECTS
Consumer lending is expected to grow at a contact value CAGR of 7% in terms of outstanding
balance for the period of 2016-2021. This growth is expected to be driven by the continued
efforts of the government in partnership with RBI to decrease repo rates, thereby making it
easier for consumers to opt for loans at lowered interest rates.
Over the review period, consumer credit grew by a 7% constant value CAGR in outstanding
balance. Growth is expected to be marginally stronger over the forecast period than over the
review period due to the continued efforts of the RBI to encourage consumers to opt for loans.
The future growth of consumer credit in terms of constant outstanding balance is expected to
come from durables lending and card lending, which are both expected to grow by a constant
2016 value CAGR of 13%. These types of loans are relatively new, and growth will be driven
by the millennial generation who have a higher income.
CATEGORY DATA
Table 1
Consumer Credit: Outstanding Balance by Category: Value 2011-2016
INR bn
Auto Lending
Card Lending
Durables Lending
Education Lending
Home Lending
Other Personal Lending
Consumer Credit
Source:
Table 2
2011
2012
2013
2014
2015
2016
1,754.7
394.9
113.9
537.8
2,289.5
5,090.8
2,082.9
485.7
84.7
595.6
2,548.2
5,797.1
2,454.9
609.6
112.9
651.6
2,878.3
6,707.3
2,896.5
757.7
148.1
715.1
3,259.4
7,776.9
3,388.9
925.2
189.6
769.5
3,634.3
8,907.4
4,039.6
1,141.6
237.7
819.5
4,034.0
10,272.5
Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources
Consumer Credit: Outstanding Balance by Category: % Value Growth 20112016
% current value growth
Auto Lending
Card Lending
Durables Lending
Education Lending
Home Lending
Consumer Credit
Source:
2011-16 CAGR
2011/16 Total
18.1
23.7
15.8
8.8
12.0
15.1
130.2
189.1
108.6
52.4
76.2
101.8
Table 3
Passport
Consumer Credit: Gross Lending by Category: Value 2011-2016
INR bn
Auto Lending
Card Lending
Durables Lending
Education Lending
Home Lending
Consumer Credit
Source:
Table 4
2011
2012
2013
2014
2015
2016
547.9
953.3
81.9
129.8
955.0
2,667.9
698.0
1,184.0
60.2
152.4
1,075.0
3,169.5
807.4
1,452.9
81.3
176.5
1,225.8
3,744.0
947.9
1,826.3
106.4
199.7
1,379.7
4,460.1
1,101.5
2,233.6
134.3
220.0
1,548.0
5,237.5
1,308.5
2,716.1
166.3
241.6
1,730.7
6,163.2
Consumer Credit: Gross Lending by Category: % Value Growth 2011-2016
% current value growth

2011-16 CAGR
2011/16 Total
19.0
23.3
15.2
13.2
12.6
18.2
138.8
184.9
103.1
86.1
81.2
131.0
Auto Lending
Card Lending
Durables Lending
Education Lending
Home Lending
Consumer Credit
Source:
Table 5
Forecast Consumer Credit: Outstanding Balance by Category: Value 20162021
INR bn
Auto Lending
Card Lending
Durables Lending
Education Lending
Home Lending
Consumer Credit
Source:
Table 6
2016
2017
2018
2019
2020
2021
4,039.6
1,141.6
237.7
819.5
4,034.0
10,272.5
4,528.4
1,315.2
276.2
831.0
4,130.8
11,081.6
5,049.1
1,500.6
316.5
840.9
4,221.7
11,929.0
5,609.6
1,691.2
357.1
850.2
4,301.9
12,810.0
6,204.2
1,880.6
396.7
858.7
4,366.5
13,706.7
6,824.6
2,074.3
437.5
866.4
4,418.9
14,621.8
Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Forecast Consumer Credit: Outstanding Balance by Category: % Value

Growth 2016-2021
% constant value growth

2016-21 CAGR
2016/21 TOTAL
Passport
Auto Lending
Card Lending
Durables Lending
Education Lending
Home Lending
Consumer Credit
Source:
Table 7
11.1
12.7
13.0
1.1
1.8
7.3
68.9
81.7
84.1
5.7
9.5
42.3
trade sources
Forecast Consumer Credit: Gross Lending by Category: Value 2016-2021
INR bn
Auto Lending
Card Lending
Durables Lending
Education Lending
Home Lending
Consumer Credit
Source:
Table 8
2016
2017
2018
2019
2020
2021
1,308.5
2,716.1
166.3
241.6
1,730.7
6,163.2
1,467.4
3,101.7
192.1
246.7
1,793.0
6,800.9
1,639.1
3,483.3
217.4
251.1
1,852.2
7,443.1
1,821.0
3,866.4
242.7
254.9
1,909.6
8,094.6
2,015.9
4,229.9
267.4
258.2
1,963.1
8,734.4
2,217.4
4,521.7
292.8
261.0
2,012.1
9,305.2
trade sources
Forecast Consumer Credit: Gross Lending by Category: % Value Growth

2016-2021
% constant value growth
Auto Lending
Card Lending
Durables Lending
Education Lending
Home Lending
Consumer Credit
Source:
2016-21 CAGR
2016/21 TOTAL
11.1
10.7
12.0
1.6
3.1
8.6
69.5
66.5
76.1
8.0
16.3
51.0
trade sources

Consumer Credit in India

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CONSUMER CREDIT IN INDIA