Experian India appointed Neeraj Dhawan as its Managing Director in April 2021. He has vast experience in working with the multiple banks. He has been closely associated with the bureau for the past six years. He was an advisor on the India strategic board at Experian.
Dhawan spoke to Moneycontrol’s Hiral Thanawala on consumer behaviour in these pandemic times and the impact of a loan moratorium on retail borrowers’ credit scores.
How has consumer behaviour changed over the years, especially in these pandemic times?
The consumer behaviour pattern has changed a lot over the last decade. There is a smooth availability of the credit through banks and fintech firms. The current pandemic has brought borrowers and lenders closer on digital platforms. The digital lending journey has broken the barriers to geographies. Consumers can avail credit seamlessly.
With the rise in digital lending, we need to be a little cautious because there is a trend of frauds and fraud related issues cropping up. According to our Global Insights Report, there is a 40-45 percent increase in frauds happening through digital lending. To counter the rising threat of fraud, we have upgraded and enhanced one of our flagship products, CrossCore.
How has the loan moratorium affected retail borrowers’ credit scores?
We have observed that some consumers’ credit scores are affected after the loan moratorium period got over. This is because some segments of the industry have not yet come back to normalcy. There are job losses and pay cuts in the affected industries because of the lockdown. All these factors are deteriorating the repayment pattern of customers and increasing the delinquency for several lenders. This is visible in the annual and quarterly results of lenders as well.
How were the delinquency trends across consumer loan segments in the last one year?
The unsecured loan segment, which includes cards and personal loans, has grown exponentially in the last 18 months. Now, there seems to be an impact that is visible in some of these segments, with rising NPAs.
We see an increase in the 30 Days Past Due (DPD) for consumer, personal and two-wheeler loans. The 30 DPDs are moving in the range of 3-15 percent for different products. The NPAs are in the range of 3 percent to 5 percent. If the NPAs rise above 5 percent, it will be a challenge for some of the lending firms.
Some of these segments are seeing higher delinquency. We expect a revival in 30 DPDs post the second wave of the pandemic.
How has Experian supported consumers in this pandemic?
Ever since the pandemic started, we have come out with the facility that allows consumers to access their credit reports for free from our website multiple times in a year. This facility has helped them understand their credit behaviour and enhanced their ability to get credit in future. A regular monitoring of credit reports has helped consumers keep their credit profile healthy.
We have seen higher off-take of credit reports in the last one year over the previous year. There is a growing consumer awareness about the importance of the credit report, resulting in them availing of free credit reports from our website.
How have the consumption spending and borrowing trends been in India?
Experian India recently released a report titled ‘A Review of India’s Credit Ecosystem’ that shows a marked shift not only in terms of consumer behaviour but also new-age lenders changing the financial ecosystem.
According to the report, there is an enormous change in the consumption pattern which is growing around 15 percent at an annualised rate. The pandemic has led to a rise in digital spending, and this has boosted the growth of consumer goods and durables, essential commodities and FMCG, to name a few sectors, in a larger way. This has boosted the growth of sectors like consumer goods and durables, essential commodities and FMCG to name a few in a larger way. That’s a positive impact contributing to a revival in the economy. The growth coming from direct and indirect channels and the segments will contribute to the economy’s growth, supported by fulfilling the credit demand of the lenders.