Big surge in demand for retail loans

Kochi: The demand for home and auto loans and gold loans at most banks and non-banking financial institutions (NBFCs) has reached the pre-COVID levels. There is a huge demand not only for these so-called 'retail loans' but also for credit cards.

The main reason for the increase in home loans is the low level of interest rates, which have reached their lowest in many years. The interest rate has now dropped to 6.7%.

It is the increase in credit off-take that has resulted in the growth in vehicle sales. There is an increase in demand for two-wheeler loans. However, car loans are more popular. Although the demand for commercial vehicle loans is very low, agencies expect the situation to improve towards the end of the financial year.

The demand for personal loans is also high. It has, however, not reached the level that was seen before the COVID pandemic struck expansion. It is suspected that this could be due to the delay in obtaining credit rating.

Credit card use also increases

The number of those applying for credit cards is increasing by the day. The number of card users is about to cross six crore. In April, there were 5.8 crore cards in circulation.

The number of companies issuing credit cards is also increasing.

There has also been a significant increase in the amount of gold loans being disbursed by NBFCs. Many commercial banks are also seeing gold loan as a good source of income and are giving more focus to marketing it.

According to bank officials, gold loan is one of the fastest growing retail loan products. Some banks have even created special 'business-verticals' exclusively for gold loans.