Personal Loan Industry and its Emerging Trends - Personal Loan Blog - Tata Capital

Emerging Opportunities In The Indian Personal Loan Industry

Feb 28, 2017

For years, people taking personal loans were looked at with suspicion. The reason being the perception that these people would be poor in managing their own money. But things have changed and so have the perceptions. Today, taking a personal loan is considered normal. Consumers have much higher disposable incomes and aspirations. And they are not ready to wait for years to save up to live their dreams. They are quite open to take loans and meet their lifestyle needs.

This is the reason why personal loans are becoming popular these days. The personal loan category has been growing in double digits at aggregate level. This trend is expected to continue as more and more young people joining the workforce get ready to take their first loan.

But earlier, a borrower had to wait for weeks and months to get his hands on money, that too if the loan application was approved. Now slowly, there is transition from purely offline model to a hybrid model that makes use of both online and offline modes to reduce the loan processing times.

Nowadays, every bank offers a variety of services through their online mechanisms. Lenders are able to assess potential borrowers' eligibility criteria and documents on the fly. There are lenders that can approve the loans online itself and money is disbursed within just few hours. Now, no more is there need to undertake several trips to convince bank manager to approve your loan.

Much of this has been made possible by institutionalization of credit rating systems. Lenders are able to assess every applicant's credit history online itself. This dataset combined with other online risk-assessment tools, allows lenders to quickly process loan application and take credit-related decisions.

Also, Indian banks have already burnt their fingers by lending aggressively to large corporates that have failed to repay their loans on time. Now many banks are refocusing on consumer loans like personal loans to counter the slowdown in credit demand from corporates. So all in all, the scope of Indian personal loan industry is increasing with each passing day.