The stringent lockdown in the first quarter of the new tax has led to steep demand for homes and car loans. In July and August, the amounts of home loan inquiries in TransUnion Cibil data have recovered to be greater than last year, although they are still smaller than those of January and February 2020.
The regeneration was led by banks in the public sector, the first to start again. Public sector banks’ Personal Loan inquiries are 118 percent last year and 102 percent in 2020. Private banks just made three quarters of last year, with half the demands of NBFCs and financing companies as in the pre-Covid months.
The TransUnion Cibil information shows that the household loan surveys have rebounded to 112percent, but only to 92percent, between July and February 2020 (pre-Covid), of what was seen in July-August 2019. Auto credit accounts for 88% of last year’s level and 84% of pre-Covid while property credit demand stands at 90% of last year but 72%.
Whenever a borrower is finding out his eligibility, lenders are submitting a letter to the credit office. Although credit inquiries do not equal loan payments, they are a strong indicator of market demand. In addition, questions arise when a borrower tries to move the loan from one borrower to another to use lower interest rates.
Approximately half a dozen government banks, among them State Bank of India, Bank of Baroda and Union Bank, give domestic debts below 7%. Also providing loans under 7% in the private sector is HDFC and ICICI Bank. Furthermore, between September and December 2020, the Maharashtra government offers benefits for home loans in the form of a reduced tax of 2 per cent rather than 5 per cent.
In the personal loan market, where demand is still very modest, surveys only reflect 40% of pre-Covid and 47% of last year. There is subdued demand for credit cards, which are distributed mainly by direct sales agents in kiosks and shops. Card enquiries are just 61% in January and February 2020.
“We also saw a move from a mix of enquiries from these cities to more rural and semi-urban areas as larger metro sites see increased Covid-19 cases and sporadic lockdowns,” says Transunion Cibil in its report published on Tuesday.
According to a credit card study by Macquarie Research , new additions would probably slow due to less jobs. “The gross increase in employment has been dramatically reduced since March 2020 – a decrease of about 60 percent. Locks have also contributed to a lower branch footfall and a near-complete halt in kiosk towing customers in centres and airports,” said the study.