High festive demand in October and November drove disbursal of personal loans from banks. Personal loans disbursed by lenders rose 30% year on year to reach Rupees 50.57 trillion as of November 17, according to the Reserve Bank of India (RBI) data. This impressive growth in advances will help lenders post better third-quarter earnings, say experts.
“Both personal loans and consumer durable loans rise during the festive seasons. However, the spike in consumer durable loans is more than personal loans, because individuals like to buy home appliances and digital devices during the festive season,” Virat Diwanji, group president and head of consumer banking at Kotak Mahindra Bank, told FE.
He added that the advancement in technology has significantly reduced the time required for approval and disbursement of personal loans. With the widespread adoption of smartphones, individuals can now obtain approval and receive the loan amount within minutes.
Customers tend to align their plans to purchase electronic goods and home appliances with festive season because companies launch various deals offering big discounts during the period. Consumer durable loans of banks have reached Rupees 23,595 crore as of November 17, recording a growth of around 11%, showed RBI data.
“Banks usually witness a high demand for home, auto and personal loans in the third quarter due to festive season. The third quarter has always been full of actions in terms of retail loans while the first two quarters are relatively dull,” said the banking analyst at a brokerage firm. “Strong festive demand for retail loans will help banks post higher earnings in the third quarter,” he added.
High growth in personal loans has come amid RBI’s concerns over unsecured
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