KOCHI: Kerala, a consumer state with the banking sector reporting around Rs 3.6 lakh crore business in personal loans as on December 31, 2018, has the highest percentage of bad loans in the retail segment across the country.
As per the latest statistics provided by CRIF High Mark Credit Information Services, a credit information service provider, Kerala’s NPA figures stood at 1.41 per cent, when compared to the national average of around 1 per cent in the retail segment.
Kerala is followed by Madhya Pradesh (1.30 per cent), Tamil Nadu (1.18 per cent), Punjab (1.01 per cent), Karnataka (0.94 per cent) and Delhi (0.89 per cent), according to the CRIF. Of the retail loans, the housing finance dominates with 41 per cent, followed by gold loans at 31 per cent and car finance at 15 per cent. The NPAs for the three segments stood at 1.06 per cent, 0.24 per cent and 1.10 per cent respectively. Geojit Chief Investment Strategist V K Vijayakumar told Express that this can be considered an after-flood recovery phenomenon.
“Possibly, the affected group of people is unable or reluctant to clear dues in time expecting a moratorium or interest waiver from the government,” said Vijayakumar. He expressed hope of retail NPAs stabilising soon in the state.
CRIF High Mark Credit Information Services senior VP Parijat Garg said the retail credit industry in Kerala has witnessed nearly 20 per cent growth in the past three fiscal years, compared to the national average of 18 per cent. “Gold loans continue to be the main drivers in the lending market with its share exceeding 40 per cent and witnesses one of the lowest category-wise NPAs with 0.24 per cent in Kerala,” said Garg, adding 42 lakh loans were disbursed so far, this fiscal.
According to Malappuram District Cooperative Bank DGM Saramol CM, gold loans generally witness low NPAs as it is more liquid and price realisation is far easier. “Moreover, banks only give out 80 per cent of the value of the metal pledged, so loanees prefer to settle loans, as they can always realise more prices in the open market,” said Saramol.
A CRIF High Mark report says the education loan NPAs stood at 5.7 per cent, which is comparable to other states. Education loans normally carry higher NPAs as most applicants are not readily employed, and usually, repayment window ends within three to six months after the completion of education,” said Saramol. In Kerala, PSU banks hold a 44 per cent market share followed by NBFCs with 26.5 per cent.