The financial year 2009-10 saw a numb performance by the personal loan segment, as per the macroeconomic report from the RBI. The macroeconomic report forms the backdrop of the monetary policy that is going to be announced today.
The peers of personal loans, namely education loan and home loans however did not show such sad performance. While personal loans accounted for a 4.7% growth last fiscal as compared to 6.6% growth a year back, its counterparts were at a better edge. Education loan portfolio grew by by 31.2% (33.8%) annually while housing loans grew by 8.3% (6.4%).
"Low home loan (teaser) rates helped the growth in disbursements," said Hatim Brochwala, banking analyst, Khandwala Securities. These teaser loans came in a gush during the recovery period from the economic slowdown. Almost all banks have withdrawn the scheme except for SBI. HDFC Bank has receantly joined SBI in teaser loan scheme.
"Teaser rates may not stay for more than 2-3 months as interest rates are going up. So the growth in home loans may come down slightly," said Brochwala.
Education loan has also seen an upsurge. "During the downturn, many people went for further studies for which they had taken bank loans," said M Narendra, executive director, Bank of India. "Now that the economy is recovering they can effectively use their higher qualifications pursued during the time of recession," he said.
"The government has been emphasising on education loans, which is reflected in its guidelines stating that an educational loan can only be rejected by the highest authority. So almost all educational loans applied for are sanctioned," said C S Jain, head (personal banking), IDBI Bank.
The personal loan segment included advances against fixed deposits, credit cards etc.
Credit cards segment has suffered a huge set back owing to the increased caution against unsecured loans by banks after the recession. The segment has visualised a 28.3% decline on annual basis.