Banks report higher demand for auto and consumer durable loans


Loans for cars and consumer durables and credit card spending are slowly returning to pre-Covid levels, bankers say. However, non-bank financial firms say their borrowers’ demand for credit is still weak and may not recover until next month.

“There have been a lot of auto loan applications, especially in Tier 2 and Tier 3 cities where a lot of people buy entry-level cars to avoid using public transportation,” a banker said. private sector.

In recent weeks, a number of automakers have announced mergers with banks for easy and attractive financing programs, including weak IMEs.

Bankers said they expected a similar increase in demand for loans for two-wheelers.

Private sector lender HDFC Bank recently launched the Summer Treats campaign with offers for merchants and salaried and self-employed customers. It had also implemented no-cost, no-deposit EMI programs for major appliances, in addition to announcing discounts and refunds on certain brands. It had advertised 50% more reward points on online purchases made with credit cards.

Parag Rao, Country Head, Payments, Consumer Finance and Digital Banking and Marketing, HDFC Bank, recently said that consumer loan disbursements are on the rise as people adjust to the work-from-home model.

“There is a clear emerging need and demand for additional TVs, laptops, cell phones, Wi-Fi, mobile accessories and vacuum cleaners. There is a set of home appliances and appliances where we see the demand increasing, ”he said, adding that in the last 10 days of May, his loan disbursement for the segment had rebounded to low. pre-Covid levels of over 1,000 crore as seen in March. He had noted, however, that there was some pent-up demand.

Meanwhile, credit card spending is also experiencing a similar trend as cards are seen as contactless and easy to use compared to cash. More and more people using e-commerce portals to buy even essentials are also driving the trend.

A recent Mastercard study found that up to 77% of Indians believe the shift to contactless payments is here to stay.

NBFC: the game of waiting

However, the NBFC said that at present, the demand for loans from retail borrowers is still lukewarm and that they are seeing increased demand from small traders and businesses.

“The demand for loans has not yet returned to pre-Covid levels. We expect more investigations from July, ”said an NBFC official.

According to George Alexander Muthoot, Managing Director of Muthoot Finance, over the past month the company has seen increased demand for gold pledging. “Traders, MSMEs and other small entrepreneurs take loans to us because they want money to jumpstart their business,” he said, adding that gold loans are often faster and more convenient than loans. banking.

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