Retail Consumer / Citizens Loan / Credit Status
The Retail asset quality has been intact over the past one‐two years in vintage portfolios across all retail products (barring auto loans) and delinquencies are at low levels. Within auto loans, delinquencies are higher than normal in some segments for a few banks, but across‐the‐board deterioration is absent.
Why is the Retail Asset Quality Strong ?
Banks have changed sourcing strategy shifting from self employed to salaried customers. Many banks have put a stop to unsecured loans post the previous downturn and mix of credit off take has also altered and now just 30‐35% enquiries are for unsecured credit. Credit processes have improved over the years where subjective underwriting is being replaced with information‐based underwriting. Banks, along with their internal analysis (large banks have 3‐4mn accounts data), are utilising the bureau score for decision making.
SME Loan Status Although incremental delinquencies are raising their head in Commercial Vehicles, these are coming from low base and are well under control. NPA rates for SME and private proprietorships have been higher for a few banks, whereas the trend has been largely stable in large corporates.
Contrary to the earlier trend, which was characterised by risk pockets based on geography, the risk is now more diversified. Also, performance of rural and urban centers is at par.