Decline in Consumer Credit and Gold Loan Sanctions in Q4 FY24: FIDC Data

The lending landscape in the financial sector has seen a significant shift in the fourth quarter of the financial year 2023-24. With the Reserve Bank of India (RBI) cautioning about the pace of credit expansion, loans sanctions by finance companies in consumer credit and gold loan categories have shrunk sequentially.

According to data from the Finance Industry Development Council (FIDC), consumer loan sanctions contracted by 16.2 per cent in Q4 FY24 compared to the previous quarter. Non-banking finance companies (NBFCs) sanctioned loans worth Rs 25,358 crore in Q4, down from Rs 30,269 crore in Q3. Similarly, gold loan sanctions dipped by 6.5 per cent in Q4 FY24.

The RBI’s decision to hike risk weights for unsecured loans and put curbs on IIFL Finance, a major player in the gold loan business, has had a significant impact on the lending landscape. Several consumer lending sectors, including education, consumer, and gold loans, showed negative quarter-on-quarter growth, reflecting the cautious approach adopted by lenders.

Personal loans also saw a moderation in growth, with sanctions growing by just 1.4 per cent in Q4 FY24. Overall, NBFC loan sanctions slowed down to 2.6 per cent quarter-on-quarter growth in Q4 FY24 compared to 7 per cent in Q4 FY23.

K V Srinivasan, co-chairman of FIDC, highlighted that the RBI’s caution and actions have had a bearing on lending activity in the current financial year. The first quarter is typically slow, but the impact of the regulatory changes is expected to continue shaping the lending landscape in the coming months.

As the financial sector navigates through these changes, it is essential for both lenders and borrowers to stay informed and adapt to the evolving regulatory environment. Stay tuned for more updates on the latest developments in the lending industry.