Praveen Sahay, a Research Analyst at Prabhudas Lilladher does not anticipate a significant impact on the sales volume of white goods from the recent tightening of consumer lending norms by the Reserve Bank of India (RBI).
According to him, expensive products might experience some impact, but the overall effect is expected to be limited.
The RBI on November 16 made changes to loan provisioning norms for banks and non-banking financial companies (NBFCs) to curb the rapid rise in unsecured retail loans. Unsecured loans are those where the borrower does not need to provide any collateral.
As part of the changes, the RBI raised risk weightage for certain types of loans to 125% from 100%. This means banks and NBFCs have to set aside more capital while extending such loans.
Nilesh Gupta, Director at Vijay Sales, has a similar view. He also does not anticipate the new lending norms to impact sales. He believes that the restrictions imposed by the RBI are temporary.
Last week, Blue Star’s MD B Thiagarajan explained to CNBC-TV18 why the new norms may not impact the company's air conditioner sales. “The penetration level in the air-conditioners category is only 7%. Irrespective of what happens, a CAGR (compounded annual growth rate) of 10% is definitely possible. There may be some disruptions in sales in between. But the clear direction is that the country will have to consume air conditioners,” he stated.
According to an ICRA note, the overall banking sector’s exposure to unsecured retail credit is small at around 10% of loans as of September 2023.
Over the last two years, personal loans have grown at an average of 24% while credit card loans have risen 28% compared with overall banking sector credit growth of around 15%, PTI reported quoting a Moody's report.
(Edited by : Shweta Mungre)
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