NBFCs rule the roost in mass-market loan space
Public sector banks, on the other hand, dominate the affordable housing loan space, wherein their market share is 37%.
Non-banking finance companies (NBFCs) are dominating the mass market loan space that includes small-ticket personal loans, consumer durables loans, two-wheeler loans, and loans for affordable houses and commercial vehicles, according to a report.
A report by credit bureau CRIF High Mark, according to The Times of India, says private banks have built up their presence in these mass-market loans. In the two-wheeler loan segment, they have an impressive 29% of the market share.
Public sector banks, on the other hand, dominate the affordable housing loan space, wherein their market share is 37%. State-owned banks also have the lion’s share in business loans at 59%.
According to The Times of India report, nearly 40% of India’s population is not covered by banking as of today, and therein lies a huge opportunity for mass consumer banking. It added that lenders are increasingly turning their focus on middle- and lower-income strata of the population and young borrowers who have small but often regular credit needs.
“This segment of lending referred to as the mass market is small in terms of value in overall lending but caters to large and growing middle class/lower-income sections of the society. However, this segment is expanding exponentially in terms of volume or count of loans. Lenders, especially non-traditional ones, are leveraging this opportunity to reach borrowers far and wide, thereby strengthening their borrower base,” the CRIF report said.
The commercial vehicle segment accounts for the maximum delinquencies in mass-market loans, with 14.7% of borrowers by value failing to make timely payments, said the news report.
Small-ticket personal loan borrowers (12.7%), two-wheeler loans (11.8%), business loans (7.6%), consumer durables (4%) and affordable housing (3.7%) were next in the list.
Borrowers in the age group below 25 and in the 26-35 age bracket form a big chunk of small-ticket loans, consumer durable loans and two-wheelers. Older borrowers avail of affordable housing, business and commercial vehicle loans.