Banks offer 10-second loan to retail customers in India
The American Bazaar January 28, 2016
More profitable than incurring bad debt from NPA.
By Sreekanth A Nair
Amidst the fear of Non-Performing Assets (NPA) getting worse, Indian banks find it viable and profitable to lend to the growing middle class of the country, to enable them to purchase consumer durables like motorbikes, refrigerators and mobile phones easily.
When bad debts from large companies and infrastructure projects tend to increase, banks find their way to make a profit by lending to retail borrowers, reported The Wall Street Journal.
Showing a clear signal of more retail lending, outstanding retail loans have increased 18% in November on a year-to-year basis while loans to industry risen only 5% according to the data published by the Reserve Bank of India (RBI).
As Indian economy is poised to grow at above 7%, this move is expected to create a push in the domestic market.
“Retail banking is the only avenue left for growth. Corporates are hurting.” Abhishek Kothari, a banking analyst at Anand Rathi & Stock Brokers Ltd. in Mumbai, was quoted as saying by the Journal.
ICICI Bank, the largest private sector bank in the country, recently introduced Express Home Loan service, in which the bank claims to approve an online home loan application within eight business hours. The amount that can be given to first time home loan buying customers has also been increased.
Depositors of Axis Bank, the third largest private sector bank in the country, can avail personal loan through a smartphone app or at an Automated Teller machine (ATM).
Last year, HDFC Bank had introduced a 10-second personal loan, in which existing customers will have a pre- approved loan available to them 24X7.
Data show that individuals have a better track record of repaying their loan amount than corporate. According to the RBI data, as of June 2015, almost 21% of corporate loans were non-performing, up from about 17% in September 2013. At the same time defaulted retail loans were near 2% during the period.
The focus of banks of India is more on consumer loans whereas in Chine it is more in infrastructure and production capacity. According to the World Bank, the share of consumption in the Indian economy is around 59%, it is only 37% in China.
The American Bazaar January 28, 2016
More profitable than incurring bad debt from NPA.
By Sreekanth A Nair
Amidst the fear of Non-Performing Assets (NPA) getting worse, Indian banks find it viable and profitable to lend to the growing middle class of the country, to enable them to purchase consumer durables like motorbikes, refrigerators and mobile phones easily.
When bad debts from large companies and infrastructure projects tend to increase, banks find their way to make a profit by lending to retail borrowers, reported The Wall Street Journal.
Showing a clear signal of more retail lending, outstanding retail loans have increased 18% in November on a year-to-year basis while loans to industry risen only 5% according to the data published by the Reserve Bank of India (RBI).
As Indian economy is poised to grow at above 7%, this move is expected to create a push in the domestic market.
“Retail banking is the only avenue left for growth. Corporates are hurting.” Abhishek Kothari, a banking analyst at Anand Rathi & Stock Brokers Ltd. in Mumbai, was quoted as saying by the Journal.
ICICI Bank, the largest private sector bank in the country, recently introduced Express Home Loan service, in which the bank claims to approve an online home loan application within eight business hours. The amount that can be given to first time home loan buying customers has also been increased.
Depositors of Axis Bank, the third largest private sector bank in the country, can avail personal loan through a smartphone app or at an Automated Teller machine (ATM).
Last year, HDFC Bank had introduced a 10-second personal loan, in which existing customers will have a pre- approved loan available to them 24X7.
Data show that individuals have a better track record of repaying their loan amount than corporate. According to the RBI data, as of June 2015, almost 21% of corporate loans were non-performing, up from about 17% in September 2013. At the same time defaulted retail loans were near 2% during the period.
The focus of banks of India is more on consumer loans whereas in Chine it is more in infrastructure and production capacity. According to the World Bank, the share of consumption in the Indian economy is around 59%, it is only 37% in China.
