Salaried borrowers with steady flow of income are still a preferred choice for lenders despite expansion of personal loans to varied types of borrowers, reported TOI.
A recent study by online loan platform, PaisaBazar has revealed that borrowers from non-metros seeking credit has risen to 75% from 55% four years ago.
“Rapid digitisation within the lending ecosystem along with the new data ecosystem should act as key catalyst in the expansion of the market for personal loans and making it more inclusive,” said Paisabazaar CEO Naveen Kukreja.
Shift in profile
There has been a gradual shift in the profile of those opting for personal loans. Credit score is one of the key factors on the basis of which a personal loan is granted to the borrower.
Credit score inquiries (which are a precursor to credit) from tier-2 and -3 towns has observed a jump.
The share of tier 2 has gone up to 30 per cent from 28 per cent in FY19, and the share of tier 3 has risen to 45 per cent from 27 per cent, according to a report by online loan platform, PaisaBazar.
The salaried class has an upper edge to others in personal loans as credit information bureaus give individuals with steady income a better ranking.
Nonetheless, there is improvement in the shift of profile of those opting for personal loans.
Salaried vs Self employed
Despite the improvement, the disparity between the salaried class and others is quite apparent.
“While 29% of salaried borrowers have five active credit accounts, the number of self-employed borrowers with similar accounts is 23%,” said PaisaBazar’s study.
Salaried borrowers have on average 3.8 active credit accounts as compared to self-employed ones with is 3.4.
The approval rate for salaried is 28%, while for self-employed, it is 19% when it comes to home loans.
Additionally, over 25% of salaried consumers have an excellent credit score of 770 and above, only 14% of self-employed consumers with that strong credit profile. Both segments had 32% of consumers who had a good credit score.
In other parameters too, the gap between salaried and self-employed is visible. Average salaried customers get their first credit card at 27 against 30 for self-employed.
A sudden rise in personal loans has cautioned India’s Reserve Bank of India (RBI) as governor Shaktikanta Das, in his last monetary policy review speech, cautioned banks to exercise due diligence while giving personal loans as these have recorded a sharp increase.
