Credit penetration is fast increasing in historically under-banked regions. Uttar Pradesh has shown the strongest improvement in credit health with a CMI value of 102, an improvement of 19 points year-on-year (y-o-y), according to credit bureau Transunion Cibil. The credit bureau’s credit market indicator or CMI provides India’s credit industry with contemporary benchmark of retail lending health.
Overall loan originations of retail loans in Uttar Pradesh comprised just over a quarter (26%) that were provided to new-to-credit (NTC) consumers. Credit penetration in Uttar Pradesh is steadily increasing, reaching 13% in the quarter ending September 2022 from 11% during the same period in the previous year.
Uttar Pradesh’s share of consumer durable loans has grown to be 9% of all loans of this type across India, which is an increase of five percentage points compared to the same quarter in 2019 penetration.
From a location perspective, most inquiries (31%) still come from metro areas, but this proportion is slowly declining. Conversely, the number of inquiries emanating from rural areas has increased by one percentage point each year, from 20% in September 2020 to 22% of all inquiries in September 2022. Inquiries from urban and semi- urban areas have remained consistent at 21% and 26% respectively over the last three years.
Over the last three years, between September 2019 and September 2022, credit penetration has improved across age groups. Consumers in the 18-30 years age group who have availed at least one credit product increased from 14% to 19%; in the 31-45 year age group, it increased from 26% to 35%; and from 23% to 32% among the 46+ year cohort.
Credit supply continues to grow in line with the growth in demand, with semi-urban and rural consumers accounting for 56% of originations, and younger consumers (18-30 years age group) accounting for 37% of originations – an increase of six percentage points y-o-y, the credit bureau said.