MUMBAI: Customers in southern states are the largest borrowers of personal loans disbursed by scheduled commercial banks across the country, as per latest Reserve Bank of India (RBI) data.
As per the Handbook Statistics of Indian States 2017-18 released Saturday, banks disbursed personal loans worth Rs 5.7 lakh crore during FY17 across the south, higher than Rs 2.5 lakh crore and Rs 3.9 lakh crore in north and west respectively.
Within the southern region, Karnataka has the highest personal loan consumption of Rs 1.6 lakh crore, followed by Tamil Nadu at Rs 1.5 lakh crore, Kerala at Rs 91,000 crore, Telangana at Rs 90,200 crore and AP at Rs 72,100 crore.
In fact, the personal loan segment in southern states is also growing at a faster clip, registering 37 per cent growth in FY17 over the previous year, as against 21 and 14 per cent seen in northern and western states respectively.
This is a worrying trend as personal loans are unsecured and carry exorbitant interest rates, which when unpaid could lead borrowers to a debt trap. As it is, the penetration of informal sources like money lending and micro finance is far deeper in south, led by Tamil Nadu, Telangana and Andhra Pradesh. This comes at a time when corporate lending came to a virtual standstill, forcing public and private sector banks to rush towards retail with some like ICICI Bank even targeting an eye-popping 40 per cent growth in personal loans and credit cards this fiscal. This maddening rush is despite RBI’s advice last month to exercise caution in retail lending.
Meanwhile, the state-wise deposits data shows that southern states are the second biggest savers. While western states’ deposits stood at Rs 28 lakh crore in FY17, probably due to the highest concentration of corporates, southern region saw a deposit base of Rs 25 lakh crore, while northern region is at a distant third with Rs 22 lakh crore.
Interestingly, deposits have been growing in healthy double-digits every year in southern states, while in the west growth is rather subdued. For instance, in FY17, deposits grew by 13.1 per cent in south compared to 4 per cent in western states.