Rural, women and young two wheeler borrowers on the rise: Report

Two wheeler loans rose 13.5 percent from FY21 to FY22 and 8 percent from June 2021 to June 2022.

The share of loans greater than Rs 75000 in terms of origination has increased from 28.47 percent in FY ’20 to 47.3% in FY’22. Their share further declined to 54% in June 2022, according to a report released by the credit bureau. Motorcycle segment dominates the two wheeler market with a share of more than 60% from FY18 to FY21, though actual sales of two wheeler declined.

NBFCs account for over 60 percent of the market share of two wheeler finance followed by private banks accounting for about 30 percent as of June 2022.
For the lenders, the risk appears minimum as portfolio at risk for loans which are between 31 and 90 days past due is lower for higher ticket sized loans. For loan above Rs 1.5 lakh it is 2.2 percent compared to 5.3 percent for loans between Rs 50,000 and Rs 75000 ticket size loans as of June’22

Moreover, in sign of changing demographics, the share of rural originations in terms of value increased from 37.2 percent in FY’18 to 46.5percent in FY’22. By volume, rural originations increased from 39.1 percent in FY’18 to 48.6% in FY’22. In terms of age profile of the borrowers, originations both in value and volume terms are dominated by age groups 26-35 years, followed by 36-50 years.

“Growth in rural Originations is supported by increased penetration of Pradhan Mantri Gram Sadak Yojana (PMGSY). Completed road length under PMGSY increased from 5.3 Lakh kms in FY18 to 6.2 Lakh kms in FY22” CRIF Highmark said.

Also, women are increasingly open to buying two wheelers on loan. The share of female borrowers in originations in terms of value increased from 15.7 percent in FY’18 to 17.9 percent in FY’22. By volume, the share of Female borrowers increased from 14.7 percent in FY ’18 to 17.7percent in FY’22.

But borrowings are concentrated only in a few states. Top 10 states contributed 70.9% to originations in terms of value with top 5 states contributing 44.1% alone during the period Q1 FY’22 – Q1 FY’23.