- Corporate loan growth originations grew in lower single digits in FY23.
- Investment announcements in 2023 were at their lowest since 2018, excluding 2020.
- Auto, home and other consumption loans saw sharp growth, led by
personal loans.
Investments by companies have remained in the slow lane even in FY24, according to a report by
Most of these announcements were dominated by airlines, power, chemicals and machinery. Bank of Baroda in a report said that 2023’s investment announcements, most of which might not materialize, are at the lowest since 2018. That however excludes 2020, when Covid-19 induced lockdown was in-effect.
“Data on new investment announcements do indicate that industry in general is still in a wait and watch mode. One factor holding back investment could be excess capacity in several sectors.
Apart from this, uncertainty due to the elections could have played a role in companies being tight fisted. “The third factor could be high interest rates and the expectation of repo rate cuts next year in the second quarter of the fiscal,” the economists added.
The consumption loan boom
On the other hand, consumption loans that include home loans, auto loans, personal loans etc, grew the fastest at 37.7% in FY23. Within consumption, personal loans saw the sharpes growth, followed by consumer durable loans.
Public and private sector banks give a large chunk of home loans. “There is a 22% increase in average ticket size (ATS) from ₹20.2 lakh in FY20 to ₹24.7 lakh in FY23. There has been a shift in originations by both value and volume seen from ticket size ₹5-35 lakh to ₹35-75 lakh,” said CRIF.
Housing finance companies and PSU banks lead ticket size bands under ₹75L, while private banks lead the over ₹75 lakh ticket size loan market.
Loan origination growth (FY22 to FY23)
Fintechs lead personal loan growth
Personal loans are dominated by public sector banks and private banks by value; and NBFCs by volume. Loan originations grew twice over in both value and volume from FY20 to FY23.
“Fintechs lead the growth in small ticket and small tenor loans. Their share in originations volume for ticket size under-₹25,000 loans went up to 75% in FY23 from 67% in FY20,” said CRIF.
MSME and microfinance loan originations volume grew 20.8% and 16.6% respectively, as per the CRIF report.
"MSME lending experienced substantial percentage growth in originations by value, with the micro segment being the largest contributor. These trends, combined with an encouraging improvement in delinquencies, thus, reflect the resilience of the Indian economy,” said