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    Are millennials spawning next wave of NPA piles for banks?

    Synopsis

    The number of millennials, opting for a new loan grew 58% as against a 14% growth in non-millennial segment.

    Agencies
    Representative Image
    MUMBAI: While millennials, who have been driving credit demand by a large margin in the past two years, in what can potentially raise concerns for lenders, most of them have been taking the riskier unsecured loans, warns a report.

    The number of millennials, - those born after 1980 - opting for a new loan grew 58 per cent as against a 14 per cent growth in the non-millennial segment, a study by credit bureau TransUnion- Cibil said on Tuesday.

    Lenders are increasingly depending on the retail segment for their loan growth as its quality is better than the corporate segment which is shying away from investing having already sitting with bloated balance-sheets.

    There have also been concerns raised about the financial behaviour of the millennial segment, especially if there are over-leveraging in the process & those raising such flags are pointing to the dipping national savings rate.

    In what displays increasing consumption-oriented tendencies in this segment, the Cibil study said unsecured loans consisting of credit cards, personal loans and consumer durable loans contribute 72 per cent of the millennials' credit requirements.

    As compared to this, the secured loans of two-wheeler and auto loans consisted of only 9 per cent of the millennials' credit appetite, the study said.

    However, it what can assuage the concerns, the bureau report said the millennial segment is more conscious about their credit scores, as they believe in self-monitoring and the average is 740 out of 900.

    Millennials in Gujarat have the highest average score of 747, followed by Haryana at 743 and Rajasthan at 742, it said.

    The bureau also said that millennials have a tendency to correct their behaviour, as 51 per cent of them with a score of less than 700 improved their scores within six months of checking their scores by an average of 65 points.
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    25 Comments on this Story

    Bikash Gupta343 days ago
    can anybody be able to tell why Banks'' NPA Cumulative Figure Crossed more 20 Lakh Crore Rupees ??
    Eddie 343 days ago
    back in the 70s and 80s NPAs were unheard of. then people took loans only when they have no other option. Today the EMI culture has set in people buy all the things even they cannot afford. so soon majority of the population will be in debt traps and shall be in servitude. mordern slavery...
    kavin sangoi343 days ago
    What is the headline of the article and what''s the content....no connection
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