Rising loan impairments at India's mid-ranking banks mirror their risky lending practices, says GlobalData
November 16, 2018 (Investorideas.com Newswire) From relying on the digital disruption in the financial services sector, the Indian personal lending sector is growing strongly. In response, the tier 2 banks have increased their risk appetite and as a result are experiencing rising loan impairments. This reflects their potentially risky lending practices and an inability to correctly assess the repayment capacity of borrowers, says GlobalData, a leading data and analytics company.
The company's latest report, Retail Banking Market Dynamics: India 2018, forecasts personal loan balances, which recorded a compound annual growth rate (CAGR) of 18% during 2013–17 to reach $135.5bn, to grow at a CAGR of 16% over the period 2018-2022.
The report reveals that increased average annual wages, change in lifestyle of younger population, low interest rates, enhanced financial awareness and the advent of latest technologies are the main factors driving the increasing popularity of personal loans in India.
Resham Karira, Retail Banking Analyst at GlobalData, says: "Digital lending in India is progressing at a fast rate and the loan application process is almost completely paperless. From e-KYC to disbursal, the process is going to get more seamless and hassle-free, thereby increasing the number of people opting for it."
In line with this trend, there has also been a sharp increase in the number of FinTech companies that are making it simpler for consumers to get these loans. In addition, initiatives like Aadhaar have created the perfect base for technology and data innovations, as well as for digital players and incumbents to offer consumers tailor-made lending products along with extremely convenient and quick processes.
These positive performance trends indicate that significant growth potential remains in the personal loans market. However, an analysis of GlobalData's Retail Banking Analytics reveals that incumbents are gaining market share in all product areas from mid-ranking banks.
Karira concludes: "Mid-ranking banks have responded by increasing their risk appetite, and are experiencing rising loan impairments as a result. This not only demonstrates massive growth but also the potentially risky lending practices in terms of aggressive lending and an inability to correctly assess the repayment capacity of borrowers."
For more information
To gain access to our latest press releases: GlobalData Media Centre
Analysts available for comment. Please contact the GlobalData Press Office:
EMEA & Americas: +44 (0)207 832 4399
Asia-Pacific: +91 40 6616 6809
To gain access to our latest press releases and expert analysis on developments in your industry, please connect with us on:
GlobalData.com/Financial Services | LinkedIn | Twitter
- Quotes provided by Resham Karira, Retail Banking Analyst at GlobalData
- Information based on GlobalData's report: Retail Banking Market Dynamics: India 2018
- This press release was written using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis conducted by GlobalData's team of industry experts.
4,000 of the world's largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData's unique data, expert analysis and innovative solutions, all in one platform. GlobalData's mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.
This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders
Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. Contact management and IR of each company directly regarding specific questions.
More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release and our other news services on the Investorideas.com newswire https://www.investorideas.com/News-Upload/ and tickertagstocknews.com