According to data collected by Reserve Bank of India (RBI), borrowers from South India have a greater inclination towards personal loans in comparison to the rest of India. Going by the data provided by Central Bank, more than one-third of the total personal loans provided by scheduled commercial banks in the year 2015 are availed by borrowers in the Southern region. States including Andhra Pradesh, Karnataka, Tamil Nadu, Telangana, Kerala and two Union Territories – Puducherry and Lakshadweep, belong to the Southern region. The year-on-year rise was reported to be at 13.66% in 2015, when compared to 9.6% in 2014. Personal loans comprise housing loans, auto loans, loans for consumer durables, credit card outstanding, education loans as well as loans for advances against shares and FDs.
High Demand for Personal Loans in South India:
The southern part of India, and a part of Maharashtra have developed a high demand for personal loans owing to its higher economic activity, increasing urbanisation and more knowledge on loan products. Also, the south experienced a major boom in information technology, leading to a greater demand for home loans. This pattern has been observed, majorly in Bengaluru and Hyderabad.
A major portion of education loans have been granted in South India. Reports indicate more than 54% of education loan applications were sanctioned in the southern region of India. Maximum number of education loans are being taken in Tamil Nadu and Kerala owing to their high literacy level and the presence of a large number of professional colleges and other educational institutions. It has also been found out that awareness level of the banking system is relatively higher in South India. Therefore, a large chunk of middle-class students are also seen applying for education loans in these states.
In Mumbai, the constant demand for personal loans from high-income individuals is due to the concentration of the corporate sector in this region.
State-wise Personal Loan Exposure:
Banks of the Western Region of India, including Goa, Maharashtra, Gujarat, and two Union Territories – Daman & Diu and Dadra & Nagar Haveli, have reported the second highest personal loan exposure at 23.6% of the total personal loans.
While banks in Maharashtra were reported to have the single largest exposure in personal loans at Rs.2,01,300 crore, last year. Second in line was Tamil Nadu at Rs.1,28,000 crore, followed by Karnataka at Rs.1,20,900 crore and Andhra Pradesh at Rs.1,20,300 crore, including Telangana’s data.
Overall, the southern region of India seems to be more inclined towards taking personal loans and this can only be linked to the banking information being spread in those areas. The awareness towards using banking products such as loans is higher in these areas, enabling them to opt for such services and have a better financial planning than the rest of the country.
High Demand for Personal Loans in South India:
The southern part of India, and a part of Maharashtra have developed a high demand for personal loans owing to its higher economic activity, increasing urbanisation and more knowledge on loan products. Also, the south experienced a major boom in information technology, leading to a greater demand for home loans. This pattern has been observed, majorly in Bengaluru and Hyderabad.
A major portion of education loans have been granted in South India. Reports indicate more than 54% of education loan applications were sanctioned in the southern region of India. Maximum number of education loans are being taken in Tamil Nadu and Kerala owing to their high literacy level and the presence of a large number of professional colleges and other educational institutions. It has also been found out that awareness level of the banking system is relatively higher in South India. Therefore, a large chunk of middle-class students are also seen applying for education loans in these states.
In Mumbai, the constant demand for personal loans from high-income individuals is due to the concentration of the corporate sector in this region.
State-wise Personal Loan Exposure:
Banks of the Western Region of India, including Goa, Maharashtra, Gujarat, and two Union Territories – Daman & Diu and Dadra & Nagar Haveli, have reported the second highest personal loan exposure at 23.6% of the total personal loans.
While banks in Maharashtra were reported to have the single largest exposure in personal loans at Rs.2,01,300 crore, last year. Second in line was Tamil Nadu at Rs.1,28,000 crore, followed by Karnataka at Rs.1,20,900 crore and Andhra Pradesh at Rs.1,20,300 crore, including Telangana’s data.
Overall, the southern region of India seems to be more inclined towards taking personal loans and this can only be linked to the banking information being spread in those areas. The awareness towards using banking products such as loans is higher in these areas, enabling them to opt for such services and have a better financial planning than the rest of the country.