Mumbai, India, 24th September 2024 – India’s retail credit growth moderated in the quarter ending June 2024 as financial institutions tightened the supply of credit, particularly on consumption-led products like credit cards, consumer durable loans and personal loans. Credit performance, as measured by balance-level delinquencies, improved across most products, apart from credit cards. These were some of the findings of the latest edition of the TransUnion CIBIL Credit Market Indicator (CMI)1 report for the quarter ending June 2024.
The CMI is a comprehensive measure of data elements that are summarized monthly to analyse changes in credit market health, categorized under four pillars: demand, supply, consumer behaviour, and performance. These factors are combined into a single, comprehensive indicator, and pillars can also be viewed in more detail individually. The CMI for June 2024 was 101, which was same as that in June 2023. The indicator has remained consistently above 100 since June 2022, highlighting healthy retail lending trends in India.
Chart 1: Credit Market Indicator (CMI) June 2021- June 2024
Speaking on the findings of the June 2024 CMI report, the MD and CEO of TransUnion CIBIL, Mr. Rajesh Kumar, said: “Timely regulatory guidance and given the relatively high credit-deposit ratio, we are witnessing a moderation in retail credit growth. Lenders can now look at identifying pockets of deserving consumers across risk segments to provide access to credit for them while driving the next phase of sustainable retail credit growth.”
Although still positive for all consumer credit products other than credit cards and home loans, the CMI findings showed a decline in the year-over-year (YoY) growth rate of originations (new accounts opened) across the most popular credit products. This resulted in a continued decline in the CMI supply index from 95 in June 2023 to 91 in June 2024. Originations growth among consumption-led credit products moderated in the quarter ending June 2024, including personal loans.
Table 1: YoY Growth in Originations (Accounts)
| Product | Quarter Ending Jun 2023 | Quarter Ending Jun 2024 |
| Home Loan | -4% | -9% |
| LAP | 13% | 2% |
| Auto Loan | 10% | 2% |
| Two-Wheeler Loan | 17% | 13% |
| Personal Loan | 36% | 3% |
| Credit Card | 8% | -30% |
| Consumer Durable Loan | 14% | 4% |
While overall originations continued to grow at a moderated rate, home loan originations dropped by 9% in volume, while credit card originations declined by 30% YoY. Two-wheeler loans were the only credit product which had a double-digit growth in volume and value originated.
Share of loan originations for New-to-Credit consumers at a record low
The share of originations for New-to-Credit (NTC) consumers has declined consistently over the past five years. The share of NTC consumers in originations dropped from 16% in the quarter ending June 2023 to 12% in the quarter ending June 2024, which is the lowest share recorded by TransUnion CIBL for this segment. This indicates significant scope for lenders to drive access to credit opportunities for NTC consumers. Increasing NTC originations will also help lenders reduce concentration risk in their credit portfolios.
India has the largest young population in the world, with its 254 million people aged 15-24 years2, and insights show that approximately 99 million consumers opened their first credit product and became NTC in 2023-24. Millennials (consumers born between 1980 and 1994) made up the largest part of this group (35%), followed by Gen Z at 22% (born from 1995 and later).
“Sustainable credit growth can be achieved by identifying and providing access to credit for these New-to-Credit consumers using information analytics and technology-based solutions. Emerging pockets of deserving consumers exist across India’s socio-economic categories and geographies and will be the channels of profitable growth and financial inclusion,” explained Mr. Kumar.
TransUnion CIBIL’s studies also show that lenders providing a NTC borrower with their first account also benefit from a customer loyalty perspective: 48% of first-time borrowers who open their second credit product within a year, do so with the same lender who provided them their first loan.
Credit performance continued to improve across most products, except for credit cards
The CMI for consumer performance improved by six points from 96 in June 2023 to 102 in June 2024, reflecting the continued improvement in overall balance-level serious delinquencies (measured as 90 days or more past due) across most product categories. In contrast to all other credit products credit cards showed a marginal increase in delinquencies, continuing the trend set over the last four quarters.
Table 3: YoY Improvement in Balance-Level Delinquencies*
| Product | Quarter Ending June 2024* | YoY Change (bps) |
| Home Loan | 0.9% | -32 |
| LAP | 1.6% | -59 |
| Auto Loan | 0.6% | -7 |
| Two-Wheeler Loan | 1.4% | -51 |
| Personal Loan | 1.2% | -2 |
| Credit Card | 1.8% | 17 |
| Consumer Durable Loan | 1.4% | -36 |
* excludes Asset Reconstruction Companies
With rapid digital transformation, balancing consumer convenience and credit risk is crucial for lenders. Regular monitoring of early warning signals and taking timely actions to control potential risks will go a long way in managing portfolio quality while achieving sustained growth.
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