LAP borrowers held avg balances of Rs 35 lakh in Sept quarter: Study

Chennai: Misdemeanours in the Loan Against Property (LAP) segment have increased 73 basis points year-on-year to 3.03 per cent in the previous quarter, a report has said.

Released by credit information bureau, Transunion Cibil, the report said, “The rise in LAP balance-level delinquency rates is significant because of the much larger average balances for this loan type, and bears watching by lenders who are active in this segment.”

Loans against property, which constitute 1.6 million total accounts, increased by 33 per cent in the last year.

While the number of these loans in the marketplace is much smaller than for cards and personal loans, the average balance of these accounts makes this product significant in the retail lending landscape, Cibil said.

Indian LAP borrowers held average balances of Rs 34 lakh in the September quarter. Comparatively, the average balance of loan size for personal loans per borrower was Rs 2.52 lakh and the average balance per credit card holder was Rs 46,000.

Cibil said retail outstanding balances increased by 21 per cent since last year and number of accounts rose by 28 per cent in the same timeframe. The increases in balances and accounts were similar as those seen last year in the same quarter when balances rose 22 per cent and accounts grew by 23 per cent on an annual basis, it said.

The report said consumers in the 30-49 years age group are a mainstay of the retail lending market. In the September quarter, this age group comprised a majority of the total number of credit-active consumers (56 per cent) and a higher percentage of total balances (60 per cent), overshadowing the shares of all other age groups, it said.

“While India continues to be in growth mode, lenders must judiciously monitor their risk management processes. For instance, the number of loans against property has risen at a rapid rate. At the same time, delinquency rates for these loans have now crossed three per cent for the first time in several years. Lenders must now determine if the rapid demand for these loans, which are an excellent revenue generator, outweighs the recent delinquency increases,” said VP of Research and Consulting for TransUnion CIBIL, Yogendra Singh.


NT Bureau