Delinquency in retail loans stabilising: Equifax

Delinquency rate of loans that are delinquent beyond 90 days stood at 2.16% as of Q4 of calendar year -16, a 0.06% decrease from Q3 of 2016

MUMBAI: There are early signs of recovery are with delinquency rates in retail loans either stabilizing or decreasing for most lenders, according to a study by credit bureau Equifax.

Delinquency rate of loans that are delinquent beyond 90 days stood at 2.16% as of Q4 of calendar year -16, a 0.06% decrease from Q3 of 2016. Both PSU and NBFC lenders have seen a drop in delinquency rates during the fourth quarter compared to the previous quarter.

The drop in delinquency rate for PSU banks over the previous quarter were contributed by agri, auto and business loans, the study noted.

Although PSU banks have seen a reduction in delinquency rates, in absolute terms they held 57% of the overall 90 days and beyond delinquency pool but only 48% of total loan dues.

Co-operative banks saw the largest quarterly increase, jumping from 2.85% in Q3 of 2016 to 3.74% during Q4 of 2016.

State-wise analysis of delinquencies showed that Bihar topped the list followed by Punjab, Uttar Pradesh, Haryana and Madhya Pradesh. The high delinquency rate of Bihar is attributed to agri, business and tractor loans.
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Both secured and un-secured portfolios witnessed an overall decrease in delinquency rates in Q4-16 end compared to the previous quarter. In absolute terms, delinquency rates of un-secured products were 2.5 times higher than those of secured products, the study noted.

Secured products (58%) within the basket of all products saw a higher growth rate of 18.7% driven mostly by property and gold loans.
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