Loans for cars and consumer durables and credit card spends are slowly inching back to pre-Covid levels, bankers say. However, non-banking finance companies claim that credit demand from their borrowers is still weak and could see recovery only from next month.

“There have been a lot of demand for car loans, especially from Tier 2 and 3 towns where many people are buying entry-level cars to avoid using public transport,” said a private sector banker.

In recent weeks, a number of automobile manufacturers, have announced tie-ups with banks for easy and attractive finance schemes, including low EMIs.

Bankers said they are expecting a similar surge in demand for two-wheeler loans.

Private sector lender HDFC Bank had recently launched the Summer Treats campaign with offers for both merchants and salaried and self-employed customers. It had also rolled out no-cost EMI and no down payment schemes for large appliances, besides announcing discounts and cashbacks on select brands. It had announced 50 per cent extra reward points on online purchases made using credit cards.

Parag Rao, Country Head, Payments, Consumer Finance and Digital Banking and Marketing, HDFC Bank, had recently said consumer loan disbursements are seeing a surge as people are adapting to the work-from-home model.

“There is a clear emergence of need and demand for additional TV, laptop, mobile phones, Wi-Fi, mobile accessories and vacuum cleaner. There is a set of consumer appliances and home appliances where we are seeing demand picking up,” he had said, adding that in the last 10 days of May, its loan disbursement for the segment had bounced back to pre-Covid levels of over ₹1,000 crore as was seen in March. He had, however, noted that there is some amount of pent-up demand.

Meanwhile, credit card spends are also seeing a similar trend as the cards are seen to be contactless and easy to use compared with cash. More people using e-commerce portals to buy even essentials is also seen driving the trend.

A recent study by Mastercard revealed that as many as 77 per cent of Indians believe that the shift to contactless payments is here to stay.

NBFCs: The waiting game

However, NBFCs said that as of now, the demand for loans from retail borrowers is still tepid and they are seeing more demand from small shopkeepers and businesses.

“Loan demand is yet to go back to pre-Covid levels. We are expecting more enquiries from July onwards,” said an NBFC official.

According to George Alexander Muthoot, Managing Director, Muthoot Finance, in the last one month, the company has seen more demand for pledging of gold. “Shopkeepers and MSMEs and other small businessmen are taking loans from us as they want money to re-start their business,” he said, adding that gold loans are often faster and more convenient than availing bank loans.

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