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The <keyword id="21627536" type="General" weightage="100" keywordseo="gold-loan-market" source="keywords">gold loan market</keyword> in <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword> is on the cusp of substantial growth, driven by rising per-gram gold rates and increasing customer demand. Currently, the market is predominantly controlled by the <keyword id="21485305" type="General" weightage="20" keywordseo="unorganized-sector" source="keywords">unorganized sector</keyword>, which holds a 63 % share, while <keyword id="22789155" type="General" weightage="20" keywordseo="organized-players" source="keywords">organized players</keyword>, including banks and Non-Banking Financial Companies (<keyword id="19938300" type="General" weightage="20" keywordseo="NBFCs" source="keywords">NBFCs</keyword>), account for the remaining 37 %, according to a recent <keyword id="20055667" type="General" weightage="20" keywordseo="PwC" source="keywords" meta.keywordsubtype="org" meta.entityname="PwC" meta.hostid="83" meta.entityid="PwC">PwC</keyword> report. Indian households are estimated to possess approximately 25,000 tonnes of gold, valued at around Rs 126 lakh crore. Despite this vast wealth, the existing gold loan market through organized channels is valued at just Rs 7.1 lakh crore. With the market penetration of gold loans in India currently at only 5.6%, there is considerable untapped potential within <keyword id="22902023" type="General" weightage="20" keywordseo="household-gold-holdings" source="keywords">household gold holdings</keyword>. Although not all gold is available for pledging--due to factors such as religious significance, emotional value, or lack of financial need--there remains substantial opportunity for growth in the gold loan sector. The gold loan market in India has historically been dominated by the unorganized sector. However, in recent years, organised players, particularly NBFCs, have begun to gain market share. Banks, too, have been making inroads, especially through retail gold loans and a continued focus on agricultural gold loans. This shift is expected to continue as organised players leverage their formal lending structures, transparency, and customer trust to capture a larger share of the market. Shaji Varghese, CEO, Muthoot FinCorp Limited, "Gold loan assets have been growing steadily and the potential to grow further is high since a major part of the country's gold loan market is still in the unorganized sector. <keyword id="19910265" type="General" weightage="20" keywordseo="gold-prices" source="keywords">Gold prices</keyword> have been rising over the years. There is also a paradigm shift on how buying gold is perceived today. Traditionally gold was purchased for historical, cultural and societal reasons and while that continues, people have started buying gold as an investment and also as a convenient option to raise funds for financial requirements." India remains one of the world's largest consumers of gold, with total demand reaching 747 tonnes in 2023. However, this represented a 3% decrease compared to the previous year, primarily due to the surge in gold prices, which dampened demand for gold jewellery. The price of gold in India increased from Rs 55,375 to Rs 66,532 per 10 grams (22 carats) between November 2023 and May 2024, prompting a shift towards lightweight or lower-carat jewellery items. Globally, the demand for gold grew by 3 % in 2023, with China emerging as the largest market. The global market's expansion presents opportunities for Indian gold loan financiers to explore new avenues for growth beyond domestic borders. Gold's relationship with the US dollar is a key factor influencing gold prices in India. A weakening rupee often leads to an increase in gold prices, as gold is priced in USD internationally. This dynamic drives higher imports and increases the cost of gold in rupees, further fuelling demand as investors seek a safe haven against currency fluctuations. V.P. Nandakumar, Managing Director and Chief Executive Officer, Manappuram Finance Ltd, "Of late, the sharp increase in gold prices has imparted some stability to the gold loan book of most players and we do not expect gold prices to come down due to geo-political factors, the accumulation of gold by central banks as well as the lasting allure of the yellow metal." The securitisation of gold through various financial instruments offers new avenues for gold loan players to diversify their offerings. By using gold-based security as collateral, established players can introduce new loan products that leverage the intrinsic value of physical gold.

India's gold loan market set for rapid growth amid rising prices; unorganized sector holds 63% share, notes recent PwC report

India's <keyword id="22879519" type="General" weightage="20" keywordseo="organised-gold-loan-market" source="keywords">organised gold loan market</keyword> is projected to double in the next five years to Rs 14.19 lakh crore despite expected moderation in growth due to stricter regulations, according to a <keyword id="19938520" type="General" weightage="20" keywordseo="PwC-India" source="keywords" meta.keywordsubtype="org" meta.entityname="PwC India" meta.hostid="153" meta.entityid="PwC India">PwC India</keyword> report. In fiscal 2023-24, the organised <keyword id="21627536" type="General" weightage="100" keywordseo="gold-loan-market" source="keywords">gold loan market</keyword> demonstrated substantial growth, reaching a valuation of Rs 7.1 lakh crore, according to the report titled 'Striking gold: The rise of India's gold loan market' . "It is expected to reach around Rs 14.19 lakh crore by FY 2029 at a five-year CAGR of 14.85 %," it said. Indian families own massive quantities of gold, estimated at 25,000 tonne. Existing gold holdings with <keyword id="19895507" type="General" weightage="20" keywordseo="Indian-households" source="keywords">Indian households</keyword> are valued at roughly Rs 126 lakh crore, the report said. It further said the gold loan market is poised to see moderate growth over the next two years, as gold lenders are facing increased scrutiny from regulatory authorities regarding loan-to-value (LTV) maintenance and auction-related procedures. "The second-largest player in the gold loan market being inactive would have an impact on market growth in FY25," the report said. Also, the <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>'s advisory to <keyword id="19938300" type="General" weightage="20" keywordseo="NBFCs" source="keywords">NBFCs</keyword> on cash disbursement, which limits the amount of cash disbursal to Rs 20,000, could push customers to rely on the unorganised sector. The regulator has also raised concerns about the evaluation process for lending activities through fintech startups. The increased regulatory scrutiny and revised guidelines have led to a dip in the share prices of leading NBFCs, PwC said. "Gold loan lenders are expected to use this period to ensure that they are compliant with all regulatory guidelines while undertaking several measures to optimise their middle and back offices through digitisation initiatives," it said. Lenders are also expected to implement cost optimisation initiatives that will help drive up the bottom-line profitability of their companies and enhance investor confidence which has slightly depleted as a result of the regulatory scrutiny. Furthermore, the report said rising gold prices over the past financial year may also drive lenders to take a cautious approach to lending rates and pricing as any downward movement in gold prices will result in a substantial LTV breach that will further create operational issues for lenders in the form of auctions. "The growth of the gold loan market is expected to be steered by both banks and NBFCs," the report said. The emergence of digital gold loan aggregator platforms and their strategic collaboration with gold loan lenders such as banks and NBFCs will be a key driving factor for the growth of the industry, enabling gold loan lenders to tap into a previously untapped segment of digitally savvy customers. "While the forecasted growth of the gold loan market means potential growth for all players, the impact on the players may vary. Banks are expected to benefit from their lower interest rates," PwC said. Jaikrishnan G, Partner (Financial Services), PwC India said lending against gold is the oldest form of credit. It remains one of the most attractive options for consumer as well as lenders. "High return-on-assets, manageable risk, timely regulatory interventions, growing adoption, tech-enabled operating models have all contributed to sector growth. As India embraces the vision of Viksit Bharat, gold loans will provide much needed liquidity and credit access to growing small and medium entrepreneur segments," he said. The report further said growth by NBFCs is expected to be fuelled by their expansion and increased outreach to regions with low penetration, bringing new credit customers to the financial services ecosystem. Also, fintechs will play a critical role in bringing in the required technology and innovation into the industry, thus helping lenders to create unique product propositions to boost growth, it said. <keyword id="20037818" type="General" weightage="20" keywordseo="South-India" source="keywords">South India</keyword> contributes to a vast extent, as it emerges as the dominant market for gold loans, with 79.1% share of the total outstanding loans. The report also noted that an assumption can be made that the entire Rs 126 lakh crore worth of gold will not be available for pledging due to various reasons like jewelry belonging to religious institutions, jewellery with emotional value, and certain jewellery held by individuals who are not in need of finance.

Gold loan market projected to double in 5 years to Rs 14.19 lakh crore, says PwC India's report

<keyword id="19922074" type="General" weightage="20" keywordseo="Reserve-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank" meta.hostid="261" meta.entityid="Reserve Bank">Reserve Bank</keyword> Governor Shaktikanta Das on Thursday said surge in top-up <keyword id="21191532" type="General" weightage="20" keywordseo="housing-loans" source="keywords">housing loans</keyword> is not a system-wide issue but confined to few entities. Briefing media after the announcement of bi-monthly monetary policy review, Das said, "regulatory requirements in top-up housing loans are not being followed by certain entities and it is not a system-level problem." Such cases are being dealt at the supervisory level bilaterally, he said. Banks and <keyword id="19938300" type="General" weightage="20" keywordseo="NBFCs" source="keywords" meta.keywordsubtype="org" meta.entityname="NBFCs" meta.hostid="261" meta.entityid="NBFCs">NBFCs</keyword> have also been offering top-ups on other collateralised loans like gold loans. "Such practices may lead to loaned funds being deployed in unproductive segments or for speculative purposes. Banks and NBFCs would, therefore, be well-advised to review such practices and take remedial action," he said. Therefore, he said, banks should adhere to regulatory prescriptions relating to loan-to-value (LTV) ratio, risk weights and monitoring of end use of funds with regard to top-ups. Das further said that the divergence between loan and deposit growth may create asset liability mismatch or <keyword id="22712997" type="General" weightage="20" keywordseo="liquidity-management-issue" source="keywords">liquidity management issue</keyword>. It may potentially expose the banking system to structural liquidity issues, he said. He urged banks to mobilise deposits through innovative products and services by leveraging their vast branch network. On inflation, Das said, it is moderating but the pace of disinflation is uneven and slow. Pinning hopes on monsoon, which is 7 per cent higher than long-term average so far, the Governor said, it will have a good impact on Kharif output as well as Rabi because of improvement in moisture content in the soil. SEE ALSO:<a href="https://www.businessinsider.in/business/news/ola-wants-to-re-enter-the-quick-commerce-business-to-take-on-blinkit-and-swiggy-instamart/articleshow/112364583.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/news/ola-wants-to-re-enter-the-quick-commerce-business-to-take-on-blinkit-and-swiggy-instamart/articleshow/112364583.cms" target="_blank">Ola wants to re-enter the quick commerce business to take on Blinkit and Swiggy Instamart</a><a href="https://www.businessinsider.in/finance/banks/news/rbi-mpc-meet-cheque-clearing-time-reduced-upi-limit-increased-for-tax-payment/articleshow/112366099.cms" target="_blank"></a> <a href="https://www.businessinsider.in/finance/banks/news/rbi-mpc-meet-cheque-clearing-time-reduced-upi-limit-increased-for-tax-payment/articleshow/112366099.cms" target="_blank">RBI MPC meet – Cheque clearing time reduced, UPI limit increased for tax payment</a><a href="https://www.businessinsider.in/business/auto/news/tata-curvv-ev-with-up-to-585-km-range-launched-starting-at-17-49-lakh/slidelist/112342769.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/auto/news/tata-curvv-ev-with-up-to-585-km-range-launched-starting-at-17-49-lakh/slidelist/112342769.cms" target="_blank">Tata Curvv EV with up to 585 km range launched starting at ₹17.49 lakh</a>

Surge in top-up housing loans not system-wide issue, says RBI Governor

Mumbai, The Reserve Bank on Thursday tightened norms for unsecured personal loans for banks and non-banking financial companies. The revised norms wherein risk weights have been increased by 25 percentage points will not be applicable on certain consumer loans, including housing, education, and vehicle loans. Besides, the norms will not be applicable on loans secured by gold and gold jewellery. These loans will continue to attract 100 per cent risk weight. Higher risk weight implies that banks have to keep aside more money as buffer when it comes to unsecured personal loans. In simple words, a higher risk weight restricts banks' lending capacity. Recently, RBI Governor Shaktikanta Das had flagged the high growth in certain components of consumer credit and advised banks and Non-Banking Financial Companies (NBFCs) to strengthen their internal surveillance mechanisms, address the build-up of risks and institute suitable safeguards, in their own interest. The high growth seen in consumer credit and increasing dependency of NBFCs on bank borrowings were also highlighted by the governor during the interactions with MD/CEOs of major banks and large NBFCs in July and August, respectively. "On a review, it has been decided to increase the risk weights in respect of consumer credit exposure of commercial banks (outstanding as well as new), including personal loans, but excluding housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, by 25 percentage points to 125 per cent," the RBI said in a circular. The central bank has also increased the risk weights on credit receivables by 25 percentage points to 150 per cent and 125 per cent for banks and NBFCs, respectively.

RBI tightens norms on personal loans for banks, NBFCs

<keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s <keyword id="23127366" type="General" weightage="20" keywordseo="consumption-loan" source="Orion">consumption loan</keyword> portfolio grew by 15.2% year-on-year (YoY) to Rs 90.3 lakh crore as of March 2024, according to the latest <keyword id="6354680" type="General" weightage="20" keywordseo="credit" source="Orion">credit</keyword> bureau report. The fourth edition of the CRIF High Mark report noted a slowdown from the 17.4% growth recorded in March 2023, largely due to a deceleration in the home <keyword id="6362287" type="General" weightage="100" keywordseo="loans" source="Orion">loans</keyword> segment, which accounts for 40.1% of the overall consumption loan portfolio by value. The home loans portfolio saw growth slowing down to 7.9 % YoY in FY24, from the 23 % expansion seen in FY23. This was mainly due to muted growth in "originations", which increased by 9.2 % in FY'24 compared to 18.2 % in the previous fiscal year. Origination refers to the process by which a lender creates or initiates a new loan or credit, including evaluating, processing, and approving a borrower's application. The report finds a shift toward higher <keyword id="6871589" type="General" weightage="20" keywordseo="ticket-size" source="Orion">ticket size</keyword>s, with a growing preference for loans above Rs 35 lakh, although the average ticket size (ATS) rose by 32% from Rs 20.1 lakh in FY20 to Rs 26.5 lakh in FY24. In contrast, the personal loans segment maintained strong momentum, growing by 26% YoY in FY24, despite recent regulatory reforms. Larger ticket loans of Rs 10 lakh and above increased their share in originations by value, while loans under Rs 1 lakh continued to dominate in volume. Banks led in value-based originations, whereas non-banking financial companies (NBFCs) remained dominant in volume. Two-wheeler loans experienced a 34% YoY growth in FY24, up from 30% in FY23, fueled by a shift to higher ticket-size loans. However, the overall volume of originations grew at a slower pace of 13% in FY24 compared to 32% in FY23. <keyword id="35527" type="General" weightage="20" keywordseo="auto-loans" source="Orion">Auto loans</keyword>, on the other hand, grew by 20% YoY in FY24, compared to 22% in FY23. Consumer durable loans posted a robust growth of 34% YoY in FY24, up from 26% expansion in the previous fiscal. This growth was driven by a shift to larger ticket sizes, although origination volumes grew by only 8.5% in FY24, compared to 38.2% in FY23. The MSME lending segment displayed mixed results, with individual MSME loans growing faster than entity MSMEs. The individual MSME portfolio increased by 29% YoY in FY24, accelerating from 15% in FY23, while entity MSME loans grew by just 6.6 % YoY, a sharp slowdown from 17.2 % in the previous year. Microfinance lending also saw strong growth, with the portfolio rising by 27% YoY in FY24, compared to 21% in FY23. "The resilience of the Indian credit market is evident in the strong performance across various lending categories and the stability in delinquencies. Home loans remain dominant, but the growth in personal loans, two-wheeler loans, and the rebound of NBFCs highlight significant shifts in the lending landscape," CRIF High Mark MD Sanjeet Dawar said.

Consumption loan portfolio expands 15% to Rs 90 lakh crore in FY24, notes CRIF report

The <keyword id="20018890" type="General" weightage="20" keywordseo="digital-infrastructure" source="keywords">digital infrastructure</keyword> has made the <keyword id="20572901" type="General" weightage="20" keywordseo="loan-sanctioning" source="keywords">loan sanctioning</keyword> system adopt an online mode, but the <keyword id="21614839" type="General" weightage="20" keywordseo="loan-recovery" source="keywords">loan recovery</keyword> still requires a 'feet on the street' approach, says <keyword id="20506781" type="General" weightage="20" keywordseo="swaminathan-j" source="keywords">Swaminathan J</keyword>, Deputy Governor of Reserve Bank of India (RBI). Speaking at a media event in Mumbai, the deputy Governor of RBI noted that with the digital infrastructure at place, many <keyword id="22721545" type="General" weightage="20" keywordseo="fintech-players" source="keywords">fintech players</keyword> are giving loans to customers with poor credit profiles, and up on default, use aggressive recovery tactics. "While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending <keyword id="22791879" type="General" weightage="20" keywordseo="small-value-loans" source="keywords">small-value loans</keyword> to customers who often have a poor credit profiles" said the deputy governor. He emphasized that the business model of many fintech platforms involves offering small-value loans to customers who often have poor credit profiles. This has led to the adoption of aggressive recovery strategies, which on many occasions also crosses ethical boundaries. He also highlighted one particularly concerning practice that involves the invasion of customers' privacy, where recovery agents access the personal data and contacts of borrowers and use that as a threat practice. Swaminathan cautioned that such tactics not only infringe on individuals right to privacy, but also risk damaging the reputation of regulated lenders associated with these fintech platforms. He also highlighted RBI's regulations on outsourcing, that even though regulated financial entities delegate certain activities to third parties, they remain ultimately accountable for the actions of their outsourced agents. The deputy governor also noted that the digitisation allows banks and NBFCs to leverage data for greater insights into their customers' requirements and behaviour, which can be used for developing bespoke products apart from facilitating better risk management and compliance. He stated that the role of RBI as a regulator is to establish guardrails or a balanced framework that encourages innovation while ensuring that risks are managed prudently. The deputy governor also indicated the primary goal of RBI is to ensure the stability and integrity of the financial system and not to hinder business operations.

Loan sanctioning has gone digital, but recovery still needs a 'feet on the street' approach, says RBI Deputy Governor

The Reserve Bank on Wednesday asked non-bank finance companies to broad-base their <keyword id="60356" type="General" weightage="20" keywordseo="fundraising" source="Orion">fundraising</keyword> to limit reliance on <keyword id="6368751" type="General" weightage="20" keywordseo="banks" source="Orion">banks</keyword> as it called for strengthening balance sheets and guarding against frauds and data breaches. According to the report 'Trend and Progress of Banking in India 2022-23' released by the <keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>, the <keyword id="183986" type="General" weightage="20" keywordseo="indian-banking-system" source="Orion">Indian banking system</keyword> and <keyword id="6354598" type="General" weightage="20" keywordseo="nbfcs" source="Orion">NBFCs</keyword> remain sound and resilient, backed by high capital ratios, strengthening asset quality and robust earnings growth. The consolidated balance sheet of scheduled commercial banks (SCBs) in 2022-23 expanded by 12.2 per cent, driven by credit to retail and services sectors. Deposit growth also picked up, although it trailed credit growth, it said. Looking ahead, it said, "Given the increasing interconnectedness between banks and NBFCs, the latter should focus on broadbasing their funding sources and reduce overdependence on bank funding. Banks and non-banks both, need to bring in greater empathy in their customer services". The concerted efforts are needed by all stakeholders to protect the banking and payments system from the risks of fraud and data breaches emanating from cyber threats, the report added. "Overall, banks and NBFCs need to further strengthen their balance sheets through robust governance and risk management practices to meet the growing aspirations of the Indian economy," it said. As per the report, the improvement in asset quality of banks that began in 2018-19 continued during 2022-23, and even in the first half (April-September) of 2023-24, the gross non-performing assets (GNPA) ratio stood at 3.2 per cent. Higher net interest income and lower provisioning boosted net interest margin (NIM) and profitability in 2022-23, it said.

RBI asks NBFCs to broad-base fundraising, reduce dependence on banks

The asset base of non-banking financial companies has scaled past Rs 54 lakh crore as of March 2022, constituting almost a quarter of the balance sheet of the commercial banking sector, Union Minister <keyword id="15586957" type="General" weightage="80" keywordseo="bhagwat-krishanrao-karad" source="Orion">Bhagwat Krishanrao Karad</keyword> said on Tuesday. It can be noted that since the fall of the two major non-banking financial companies (NBFCs) -- IL&amp;FS and Dewan Housing <keyword id="25455" type="General" weightage="100" keywordseo="finance" source="Orion">Finance</keyword> Ltd (DHFL) -- the shadow banking industry was in a long crisis. This crisis was more to do with their ability to mop up lendable funds as banks shunned them on one side and the RBI kept on tightening the regulatory noose around them, finally bringing them on par with banks when it comes to bad loan recognition since November 2021. Addressing a CII-organised <keyword id="6355260" type="General" weightage="80" keywordseo="nbfc" source="Orion">NBFC</keyword> summit, the Union Minister of State for Finance said NBFCs have become the major growth driver of the economy by playing a vital role in providing credit to small and medium enterprises. They have helped the MSME sector scale up its operations and create more jobs. They have helped create higher credit growth than the commercial banking sector --NBFCs loans grew over 10 per cent last fiscal while for banks, it was just half of that. The main reason for their success is that they have customised products and become an innovation machine of the financial landscape, Karad said. He also credited digitisation and customer service for their success, which has seen their balance-sheet size more than double to 25 per cent of the balance sheet size of the banking sector as of March 2022 from just 12 per cent in fiscal 2010. NBFCs are investing in digital technology like artificial intelligence and big data. It will also bridge the financial gap in the coming years due to its low cost of operations, the minister said, adding NBFCs have become a strong alternative to the banking sector. CII's NBFC forum chairman <keyword id="806982" type="General" weightage="80" keywordseo="abhimanyu-munjal" source="Orion">Abhimanyu Munjal</keyword>, who also heads <keyword id="1391131" type="General" weightage="80" keywordseo="hero-fincorp" source="Orion">Hero Fincorp</keyword>, said NBFCs disbursed almost 60 per cent of their loans digitally in FY22 and have also achieved real-time customer onboarding. He said around 11.3 million MSMEs have taken collateral-free loans worth Rs 2.32 lakh crore from NBFCs till June 2022. The credit demand in the NBFC sector is expected to grow to almost Rs 30 lakh crore in the next couple of years. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/fpis-pour-11452-crore-in-financial-services-in-the-first-half-of-november/articleshow/95681904.cms">FPIs pour ₹11,452 crore in financial services in the first half of November</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/banks/news/airtel-payments-bank-rolls-out-e-kyc-based-face-authentication-for-opening-saving-accounts/articleshow/95683429.cms">Airtel Payments Bank rolls out e-KYC-based face authentication for opening saving accounts</a>

NBFCs' asset base scales past Rs 54 lakh crore: MoS Finance

The <keyword id="6354335" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) has imposed <keyword id="512003" type="General" weightage="20" keywordseo="penalties" source="Orion">penalties</keyword> to the tune of Rs 40.39 crore on banks, non-banking financial companies (NBFCs) and other entities for breach of norms during 2022-23, Minister of State for Finance Bhagwat Karad said in a written reply to the Lok Sabha on Monday. As many as 176 of these cases involving fines of Rs 14.04 crore pertained to <keyword id="6554737" type="General" weightage="20" keywordseo="cooperative-banks" source="Orion">cooperative banks</keyword>. <keyword id="141219" type="General" weightage="20" keywordseo="private-sector-banks" source="Orion">Private sector banks</keyword> were fined Rs 12.17 crore while public sector banks (PSBs) were levied penalties of Rs 3.65 crore, foreign banks Rs 4.65 crore, and NBFCs ended paying up Rs 4.39 crore. "RBI has informed that it is mandated to take enforcement action as per Enforcement Policy and Framework approved by the Board for Financial Supervision of RBI, in the form of imposition of monetary penalty on regulated entities for contraventions of different statutes and directions," the Minister stated. The RBI issued guidelines on fair practices code to be adopted by banks, NBFCs, and HFCs and these covered various aspects of lending, he added.

RBI penalties on banks, NBFCs add up to Rs 40.39 crore for 2022-23

<keyword id="19895282" type="General" weightage="20" keywordseo="mumbai" source="keywords">Mumbai</keyword>, <keyword id="19945816" type="General" weightage="20" keywordseo="fintech" source="keywords">Fintech</keyword> personal loans have grown steadily in the country and contributed to a third of overall active personal loans in September 2023, registering 62 per cent of sanction volumes in the first half (H1) of the current fiscal year (FY24), a new report said on Wednesday. Fintech loan borrowers are younger, with two-thirds coming from the age bracket of less than 35 years. Fintech personal loans have contributed a vital role in financial inclusion, serving unaddressed market segments by sanctioning over Rs 2 lakh crore since April 2018, according to the report by the <keyword id="20190392" type="General" weightage="20" keywordseo="fintech-association" source="keywords">Fintech Association</keyword> for Consumer Empowerment (FACE), an industry body convening digital lenders. "Fintechs, while small in value, are playing a mighty role in furthering financial inclusion. As the digital economy shapes up, fintechs will expand in tandem, playing a pivotal role in customers' access to formal credit - important for their financial health and resilience," said <keyword id="20670247" type="General" weightage="20" keywordseo="sugandh-saxena" source="keywords">Sugandh Saxena</keyword>, CEO of FACE. "The growing economy and digitalisation bring huge opportunities and obligations to the fintechs," <keyword id="19970173" type="General" weightage="20" keywordseo="saxena" source="keywords">Saxena</keyword> added. The report analysed trends from data of 71 fintech NBFCs from April 2018 to September 2023. Fintech loans consistently increased their share in the personal loan market over the years, doubling their share in sanctions since FY18-19, the findings showed. "In loans outstanding, the share of fintech NBFCs is just 5 per cent of the total personal loans outstanding (as of September 2023) but accounts for over a third of active loan volumes," the data showed. In H1 FY 23-24, fintech loans accounted for 10 per cent of the sanction value but 62 per cent of the sanction volume, catering to sizeable, underserved segments with small-value loans. Fintech loans are climbing in ticket sizes, with nearly half of the sanction value coming from borrowers with ticket sizes more than Rs 50,000, the report mentioned. Fintech loans are moving up in the risk chain and distribution of sanctioned value across credit scores shows that the share of mid-low risk borrowers is increasing, from 36 per cent in FY 18-19 to 59 per cent in H1 FY 23-24. Fintech loan borrowers are younger, with two-thirds coming from the age bracket of less than 35 years, said the report.

Fintech personal loans log 62% of sanction volumes in FY24 first half in India: FACE report

Kolkata, Outlook for bank <keyword id="6354680" type="General" weightage="20" keywordseo="credit" source="Orion">credit</keyword> offtake remains positive in 2024 while deposit growth is expected to improve, according to the latest research report of <keyword id="19974164" type="General" weightage="20" keywordseo="careedge-ratings" source="keywords">CareEdge Ratings</keyword>. The report said that credit offtake continued to grow, increasing 20.3 per cent year-on-year to reach Rs 159.7 lakh crore for the fortnight ending January 12, 2024. The rise was due to the impact of the merger of <keyword id="19896378" type="General" weightage="20" keywordseo="hdfc" source="keywords">HDFC</keyword> with <keyword id="19895995" type="General" weightage="20" keywordseo="hdfc-bank" source="keywords">HDFC Bank</keyword> along with growth in personal loans. If the impact of the merger is excluded, credit grew at a lower rate of 16.1 per cent year-on-year for the fortnight compared to last year's growth of 16.5 per cent, the report said. Deposits also grew 13.1 per cent year-on-year the fortnight (including the merged impact). The report said that deposit growth is expected to improve in 2024. The outlook for credit offtake continues to remain positive in 2024 supported by factors like economic expansion and continued push for retail credit supported by increasing digitalisation, according to the report. Unsecured personal loans and <keyword id="19938496" type="General" weightage="20" keywordseo="nbfc" source="keywords">NBFC</keyword> advances might witness a certain level of cooling off, the report said, adding that currently, capital levels are quite comfortable for banks and NBFCs. Higher interest rates, inflation and global uncertainties regarding geo-political issues are other key factors which could weigh on credit growth, the report said. The credit-deposit (CD) ratio has been generally hovering below 80 per cent since September 2023, the report said. The CD ratio saw an uptick of 44 basis points and stood at 79.9 per cent in the fortnight ending January 12, 2024, reaching a three-year high. Deposits have seen relatively steady performance since the COVID times, the report said. However, in recent years, credit growth has been significantly outperforming deposit growth, it said.

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