Loans for Affordable Housing may provide Profitable Growth Opportunity to Lenders: TransUnion CIBIL Market Insight Report

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Mumbai, 12 May, 2017 – Loans meant for Affordable Housing (Home loans of ticket size less than INR 10 lakhs) has shown a robust growth rate of 23% over the last five years, as per the latest market insights report from TransUnion CIBIL. Even more encouraging is the fact that this growth has come while keeping the delinquency rate firmly in control at levels around 1.0% (90+ %).Further the average ticket size has been decreasing from ~INR 4.8 Lakh in 2009-10 to ~INR 4.1 Lakh currently, possibly suggesting the credit industry’s success on the financial inclusion drive. This augurs well for the national priority of financial inclusion and credit penetration as it implies that more and more consumers from the bottom of the pyramid are gaining access to finance.

The sanctioned lending amount in the year 2016 for affordable housing is around INR 30,400 crore given to around 7.5 lakh borrowers. This implies that there may be significant scope of growth in this segment. Speaking about the findings, the COO of TransUnion CIBIL- Ms. Harshala Chandorkar said, “TransUnion CIBIL Market Insights demonstrate a healthy growth in credit penetration in the affordable housing segment. The golden lining is that there have been low delinquency rates on affordable housing loans over the last 5 years. The essence of these trends indicate a very promising growth potential for lending in this segment. Looking at the average ticket size, we can expect to witness more and more small banks and MFIs participating in affordable housing lending in the coming years."

TUCL Market Insights- Loans for Affordable Housing*
  • Number of Loan Accounts Opened:The accounts opened in the last five years have shown a steady pace of growth with an average increase of 23% from 2012 to 2016. In total, the new accounts opened in the last five years have been close to 3.5 million.

  • Total Loan Amount Sanctioned:In the year 2016, approximately INR 30,400* crores is the total amount of loan sanctioned in the affordable housing segment.

  • Average Ticket Size of Loans:The average ticket size* of loans in affordable housing has seen a gradual reduction. During 2009 – 10, the average ticket size for loans in this segment was INR 4.7-4.8 Lakhs and the latest numbers show average ticket size at INR 4.1 Lakhs.

  • State-wise Loans:Maharashtra, Madhya Pradesh, Gujarat, Tamil Nadu and Andhra Pradesh are the top five states with highest number of loan accounts* meant for affordable housing opened in the last five years. These five states contribute 55-60% of the total accounts opened and hold roughly the same share in total amount sanctioned. Maharashtra holds the top spot with the highest number of accounts opened at over 6.53 lakhs followed by Madhya Pradesh at 5.60 lakhs; Gujarat at 3.13 lakhs; Tamil Nadu at 2.65 lakhs and Andhra Pradesh at 2.28 lakhs.

  • Delinquency:The delinquency rate has mostly remained stable. The delinquency rate (90+ % (A)) in 2016 on affordable housing loan is at 1.0 %


*Home loans of ticket size less than INR 10 lakhs

“The possible reason for the steady growth is the affordable housing loan segment is the increase in lending towards the bottom of the pyramid. In consideration of the rise in home prices, this could be seen as a significant development indicator. These findings may indicate a positive trend on increasing access to finance for the grassroots and low income groups”, Ms. Chandorkar added.

With progressive government policies and availability of information for lending through the credit information infrastructure, India’s credit industry is well positioned to accelerate growth in lending and drive access to finance for many more deserving consumers across our country. TransUnion CIBIL is committed to provide content, insights, products and solutions to the Industry to support their business and catalyse credit penetration and financial inclusion.

About TransUnion CIBIL
TransUnion CIBIL is India’s leading credit information company and maintains one of the largest repositories of credit information globally. We have over 2600 members–including all leading banks, financial institutions, non-banking financial companies and housing finance companies–and maintain more than 600 million credit records of individuals and businesses.

Our mission is to create information solutions that enable businesses to grow and give consumers faster, cheaper access to credit and other services. We create value for our members by helping them manage risk and devise appropriate lending strategies to reduce costs and increase portfolio profitability. With comprehensive, reliable information on consumer and commercial borrowers, they are able to make sound credit decisions about individuals and businesses. Through the power of information, TransUnion CIBIL is working to support our members drive credit penetration and financial inclusion for building a stronger economy.

We call this Information for Good.