In absolute terms, personal loan disbursements from private and public sector banks and non-bank financial corporations (NBFCs) increased from Rs 4,027 crore to Rs 5,247 crore during this period.
According to bankers, the erosion of income coupled with increased emergency spending has led to an increase in the number of personal loans.
“After the pandemic, regular income was not completely streamlined. Many people’s savings have been eroded to meet emergency medical expenses. In sectors such as hospitality, travel and tourism, there has been virtually no recovery and many people have lost their jobs. Therefore, a lot of people have turned to personal loans,” said a well-placed source in the banking industry.
Personal loans are available from private and public sector banks at interest rates between 10% and 14% per annum.
Bankers also say that when the market opened and social gatherings started to take place, many people also took out personal loans for weddings. Interestingly, many banks have rolled out personal loan offers for travel and vacation.
“The personal loan portfolio of most banks has grown significantly since the start of the pandemic. If meeting immediate financial needs is one reason, ease of availability is another. A number of banks have introduced digital personal loans with fast approvals and disbursements. With greater mobile banking penetration, there has been a significant increase in personal loan disbursements,” said a senior banker.