Half of the country’s workforce of 400 million are active in credit, having at least one loan or credit card, a credit information company (CIC) report said on Tuesday.
Credit institutions are rapidly approaching a level of saturation with new customers because more than half of borrowers come from existing customers of a bank, according to the report by Transunion CIBIL.
India’s overall labor force was estimated at 400.7 million in January 2021, while the retail credit market has 200 million unique people active in the credit arena, he said.
It can be noted that for a long time, it has been feared that borrowers may find themselves in the traps of unregulated loan sharks and that efforts have been made to deepen access to finance.
Over the past decade or so, setbacks on the corporate lending side have led banks to prefer retail credit, but concerns are expressed about the segment’s resilience after the pandemic.
CIC data indicates that there is an addressable market of 400 million people aged 18 to 33 in rural and semi-urban areas, and highlights that credit penetration in this segment is only 8%.
In the New Credit universe (NTC), there is a greater preference for products including personal loans and durable consumer loans in the under 30 segments and those residing outside the cities of level I, he said.
The composition of women, however, continues to be much lower in the NTC segment, he said, noting that the composition of female borrowers was only 15% in auto loans, 31% in loans. real estate, 22% in personal loans. and 25 percent in durable consumer loans.
CIC data also suggests that NTC consumers are showing greater loyalty to the lending institution that provided them with their first credit opportunity, according to the report.
Borrowers also tend to prioritize paying off the first credit facility over the second in times of financial crisis, he said.
âIdentifying emerging consumers of NTC across all segments and enabling them to access financial opportunities is essential to boost economic recovery and sustainable financial inclusion in our country,â said Rajesh Kumar, Managing Director and Managing Director of CIC.
He also added that lenders can also assess the credit risk associated with NTC clients with a CIC product to improve turnaround times and reduce the cost of acquisition.
The âCreditVision NTCâ scoring model is based on an algorithm that uses the borrower’s request and survey information to help better assess their eligibility.