Retail credit growth in India decelerated during the June 2024 quarter, with home loans being the most affected, according to the latest TransUnion CIBIL Credit Market Indicator (CMI) report. Home loan originations dropped by 9% in volume, contributing to an overall dip in the CMI supply index

Financial institutions have tightened their credit supply, particularly for consumption-led products, following regulatory guidance. Rajesh Kumar, Managing Director and CEO of TransUnion CIBIL highlighted the impact of the high credit-deposit ratio on this slowdown, urging lenders to target underserved consumer segments to ensure sustainable growth in retail credit.

Home loans showed further contraction, with growth plunging from -4% in June 2023 to -9% in June 2024. Loan Against Property (LAP) followed suit, with a steep drop in growth from 13% to 2%. Auto loans and two-wheeler loans also slowed, with growth dropping from 10% and 17%, respectively, in June 2023, to 2% and 13% in 2024.

Personal loans saw the most drastic decline, with growth falling from 36% to just 3%, while credit card originations faced a sharp contraction of 30% year-on-year. Consumer durable loans also decelerated, with growth slipping from 14% in 2023 to 4% in 2024.

Despite the slowdown in credit supply, the report showed improvements in credit performance, with delinquency rates declining for home loans, auto loans, and two-wheeler loans. However, credit cards were an exception, with a 17 basis point rise in delinquencies, potentially driven by inflation and higher interest rates.

The report also revealed that only 12% of loan originations were to new-to-credit consumers, marking a record low, potentially limiting future consumer spending and financial inclusion efforts.