‘Retail credit market bounces back, PSBs lead’

TransUnion CIBIL, Retail credit market, credit market, Indian economy, Indian economy news

India’s retail credit market is poised for strong growth, supported by a significant resurgence in credit demand as well as supply, despite the second wave of the pandemic, according to TransUnion CIBIL.

Cibil said inquiry volumes have increased by 54 per cent between February and October, as economic activity gained momentum. “Outstanding balances and credit active consumers grew YoY by 8 per cent and 7 per cent respectively in August 2021,” it said.

Cibil’s Credit Market Indicator (CMI) shows that the most pronounced impact on retail lending market health was in the first few months of the pandemic, but that overall, the market has become increasingly resilient as the pandemic has progressed.

Between February and May 2020, the CMI fell 17 points from 100 to 83. The overall CMI returned to a positive trajectory and climbed nine points to 87 in August 2021 from its low earlier in the year, Cibil said. It added the second wave of the pandemic had a significant impact on the nation as a whole, but the retail credit market was more resilient as lenders adjusted their business models and became better equipped to respond.

In addition, Central and state administrations focussed on creating micro-containment zones, avoiding the need for a complete lockdown.

Inquiry volumes—a demand measure—increased by 20 per cent between February 2021 and August 2021, compared to a decline of 31 per cent seen during the same months last year.

In the first week of November 2021, there was a record increase in the number of enquires on the TransUnion CIBIL consumer bureau, indicating a marked resurgence in credit demand and economic activity in India.

These insights are a testament to both government policy as well as the speed at which lenders in the market have adapted, with PSU banks leading the resurgence in credit growth.

“Alongside an overall increase in consumer demand, we’ve also seen a corresponding increase in supply. Lenders have adapted quickly to the shift in new credit originations via digital channels, which has become the new normal in the pandemic environment,” said Rajesh Kumar, MD and CEO, TransUnion CIBIL.

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