Bank Consumer Durable Loans

Bank Consumer Durable Loans

Gone are the days when Consumer Loans offered by banks were attractive.   Not many prefer to go for Consumer Durable Loans from banks.  Various reasons are analysed here.

  1. Zero cost financing schemes and Cash back offers have taken over the place of consumer loans.
  2. The volume of banks’ Consumer Loan portfolio has come down by 75% year-on-year and non-banking institutions try to survive with attractive schemes and pricing.
  3. A Reserve Bank of India data reveals that banks’ outstanding consumer loan portfolio was Rs. 4,600 crores as on January end this year, against Rs. 19,700 crores last year.
  4. This is said to be the case, in-spite of private sector lender HDFC paying more attention on this.
  5. Also, this shows a dull demand for consumer loans after September.
  6. Preferences were observed to borrow from NBFCs who provide such loans.
  7. Also, demand for such consumer durables against credit also came down due to a low demand after the harvest season which normally is high.
  8. Also, it is noticed that consumer have shifted to no cost or Zero cost finance from NBFCs or to credit cards and one can observe that there is no one who comes with a bank cheque these days.
  9. Also, the Banks’ credit cards outstanding grew 29% year on year to Rs. 84,200 crores at the same period from Rs. 68,600 crores last year.
  10. To quote an example, ICICI Bank offers easy EMI schemes for purchasing white goods through credit cards which means easy availability of more attractive no-cost finance schemes at the door steps.
  11. Sales outlets have increased their sales by over 20 to 25% year-on-year which has brought a blow on the Bank Loans portfolio. These loans are offered by the Sales companies for a period of 3 years to sync with the festival seasons.


This clearly indicates the preference of Consumers to make a shift in availing Consumer Loans from NBFCs rather than Banks.


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