Pandemic: demand for high ticket-sized loans decreased
Seventy-three percent of Credit Managers are likely to change lending strategies for unsecured portfolio post-pandemic, according to a report by Atlanta-headquartered Equifax Inc. (NYSE:EFX), a data, analytics, and technology company, and PwC India.
Thirty-six per cent of credit managers looking to adopt alternative data in addition to bureau data for better underwriting, said the first-of-its-kind report India, collaborated by the two companies.
Fifty per cent of credit managers surveyed have accelerated the use of digital tools for customer acquisition, said the report release on 28 May 2021 from Mumbai.
Key report highlights include:
The demand for high ticket-sized loans decreased significantly post-pandemic, with large ticket-sized loans (>Rs.75 lakhs) showing sharpest decline of 80%;
The top five states (Maharashtra, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, and Karnataka) alone contributed to almost 50% of 90+dpd delinquent accounts;
Seventy-three per cent of credit managers in the PwC-Equifax survey said they are exploring change in lending strategy for their unsecured loan portfolio;
Proactive collection strategy followed by Enriching contactability of borrowers were the top two measures highlighted by credit managers to manage emerging risks.
“As practitioners, the financial services industry looks forward to understanding the macro lending trends to adapt its strategy and risk policies accordingly. This has become even more important due to COVID-related impacts in 2020,” said Rajkiran Rai G, Managing Director and CEO of Union Bank of India, the leading public sector bank.
“PwC and Equifax have brought smart data and analysis along with industry insights in this thought leadership report covering the retail lending industry trends,” he said.
“The Indian Retail Industry, with its technology-driven differentiation, is evolving at a dynamic pace. However, lenders are facing unprecedented challenges across both sourcing and collections owing to the COVID-19 pandemic,” said Sreedhar Vegesna, Partner and Financial Services Leader, PwC India.
“PwC has entered into a unique partnership with Equifax to present key sector insights and strategic inputs to lenders through its report in the Retail Lending landscape. This is a first in a series of publications which aims to empower industry players to take best-fit measures for building a robust lending portfolio and ensuring business growth,” he said.
“With the first edition of the Report on the Indian Retail Lending landscape, PwC and Equifax kick-start a unique series of publications that uncover retail lending trends across multiple lenses including geographies, sectors, and products. This report presents an opportunity for readers to revisit the key learnings from the brief sector revival witnessed as the first COVID wave subsided and leverage the same to grapple industry challenges,” elaborated Asim Parashar, Partner Financial Services, PwC.
“Currently, industry leaders have chosen product, service, and distribution channel innovation enabled by accelerated digital adoption as the preferred business growth strategy. In the future editions, PwC and Equifax will aim to explore the key strategic shifts in the wake of the second COVID wave and the industry landscape thereafter,” said Parashar.
“Over the years, Equifax, as the leading credit bureau in the country, has worked with the Indian financial services industry to help maintain high levels of underwriting standards,” explained KM Nanaiah, Managing Director, Equifax Credit Information Services Pvt Ltd and Country Leader, Equifax India, and MEA.
“Now, with its partnership with PwC, Equifax brings a report to provide insights on trends in Indian retail lending industry – from disbursements to delinquencies, from top growing states to top loan categories, and impact of COVID-19 thereof. This report will act as a lighthouse, helping the financial services industry and policymakers navigate through crests and troughs of lending cycle, thus further promoting responsible lending in these times,” said Nanaiah.
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As a global data, analytics, and technology company, Equifax playa an essential role in the global economy by helping financial institutions, companies, employers, and government agencies make critical decisions with greater confidence. Headquartered in Atlanta and supported by more than 11,000 employees worldwide, Equifax operates or has investments in 24 countries in North America, Central and South America, Europe, and the Asia Pacific region. #banking #loans #lending #economy /fiinews.com
