NEW DELHI: Amidst growing concern over very high growth in retail loans, the country’s largest bank – State Bank of India – saw its retail loan portfolio grow by 15.7% year-on-year in the second quarter, which is very much in line with most other banks (private as well as public).
SBI, which announced its second quarter financial results on Saturday, saw its home loan portfolio grow by 13.12%, auto loan portfolio by 20.24% and personal loan (Xpress Credit) portfolio by 17.83%. Its gold loan portfolio also registered a double-digit growth of 14.39%. Compared to this, the government-owned bank’s domestic corporate loan portfolio has increased by a moderate 6.62%.
As per latest available data SBI’s market share in home loans is 27.4% and in auto loans is 19.3%. The Reserve Bank of India (RBI) has, of late, expressed its concern over the very high rate of growth in retail loan portfolio of banks, especially those of unsecured loans like personal loan and credit card loans.
Noting that certain components of personal loans are recording very high growth, RBI governor Shaktikanta Das in the monetary policy statement earlier this month said that RBI is closely watching these loans for any signs of incipient stress. Though SBI’s retail loan portfolio has less than 1% gross NPAs. GNPA in the home loan segment at the end of September quarter was 0.74%, followed by 0.69% in personal loan and 0.44% auto loan. Bank of Baroda, another public sector bank, which announced its second quarter results on Saturday, also witnessed similar growth in its retail loan portfolio. Its overall retail loan portfolio grew at 22.2% even as the domestic corporate loan portfolio grew at 16.5%.
BoB’s home loan portfolio grew at 16.1%, auto loan portfolio at 21% and education loans at 18.3%. However, personal loans grew at a very high pace of 67% during the quarter. The bank also saw its retail gold loan portfolio surge by 65%. BoB’s Gross NPA ratio for Housing loans is 1.12%, 1.41% for auto loans, 1.30% for personal loans and 0.98% for retail gold loans as of September 2023. Bank of India, which also announced its Q2 results on the same day as SBI and BoB, also witnessed double-digit growth in retail loans with 14.65% growth in the September quarter.
The bank’s unsecured personal loan portfolio grew at 33% y-o-y during the quarter, followed by 17% growth in vehicle loans, 13.5% in education loans and 11.62% in home loans. Meanwhile, the TransUnion CIBIL Credit Market Indicator (CMI) report indicates financial stability with healthy retail credit growth and broadly stable delinquency levels, even though a few pockets show signs of risk build-up.
The credit bureau report shows that during the June 2023 quarter, overall balance-level serious delinquencies (measured as 90 days or more past due) improved across product categories, except for credit cards and personal loans. This improvement suggests that consumers appear to be managing their credit repayments responsibly.