The share of small ticket loans in personal loans paid in the last two years has increased almost fivefold. In the period 2017-18, these loans accounted for only 12.9% of the personal loan paid, which increased by almost 60% by March 2020. Although there has been some moderation since then, with other personal loans growing faster, small ticket loans still account for half of new disbursements.
Within the personal loans segment, the loan under Rs 50,000 is considered a personal loan with small ticket (STPL) and it is this segment that has increased volumes with an increase of up to 162% in the period 2019-20 in terms of the number of loans paid.
The total size of the STPL loan activity is estimated at approximately 12,000 lei, after registering an increase of 77% in value terms in the last financial year, as several creditors entered the market based on applications.
In fact, low-note loans recorded the maximum stress among borrowers, 9.4% of loans in value being subject to stress. According to a report by the CRIF High Mark credit bureau, finance companies and young creditors are increasingly targeting young, low-income, digitally experienced customers who have low and short-term credit needs but have a zero or limited credit history. .
But the practices of high growth and dodgy recovery, the exploitation of personal data, adopted by some creditors based on forced applications RBI prevent them in June, making it difficult for banks or BNFCs to lend through digital platform providers.
One of the characteristics of salary loans (repaid when the salary is credited) is the extremely high interest rate, which is around 15% per month. This allows creditors to operate even when delinquencies are around 10%.
An executive with a large private bank said their STPL delinquencies were in low numbers. Although the bank used the software to lend with small notes, they were intended for their existing customers, where there is a record of cash flows. Unlike banks, loan applications run analyzes on information extracted from statements sent by borrowers.
“Although there is an increase in the portfolio, the average ticket size has been steadily declining over the last two years, falling by 18% year-on-year until March 2020. Starting in August 2020, the average ticket size has increased by 5% compared to March 2020 “, Said the CRIF High Mark report.
Rating agencies say lenders do not yet have any problems due to retail lending. According to the ICRA, the efficiency of the collection (repayment) of the loans pursued by the rating agency remained constant in October 2020. However, the current efficiency of the collection continues to be below pre-blocking levels and is in the region of 81-95. % of retail loans.