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ICICI Bank to restart unsecured lending

After having stayed away from unsecured lending for nearly five years, ICICI Bank is back in the personal loan market.

To keep criteria tough, will target customers with whom it doesn?t have banking relations

After having stayed away from unsecured lending for nearly five years, ICICI Bank is back in the personal loan market. The bank, through with the marketing techniques now, is targetting customers who do not have prior banking relations with it.

However, the bank is extremely cautious in picking up its customers.

The eligibility criteria for salaried customers, who have a salary account with ICICI Bank and want to avail personal loan, involves a net monthly salary of R20,000 and a work experience of at least two years. But for customers without any prior banking relationship, the eligibility criteria involves a minimum net monthly income of R50,000 and a clean credit history.

?With the improvement in the data provided by credit information bureau, the bank can take a more informed call on selling unsecured loans to new customers. It has been a while since the bank stayed away from the unsecured loans and this way they can give a boost to their retail portfolio,? said an industry expert.

In 2007, consumer lending accounted for more than 65% of ICICI Bank’s assets but the agression in unsecured lending resulted in a fair share of loans turning toxic. Since then, ICICI Bank has been withdrawing from the retail credit market especially from the unsecured spaces of personal loans and credit cards. Today, the bank’s total retail asset stands at less than half of what it used to be in the successful days, analysts point out.

In the July-September quarter, ICICI Bank’s retail portfolio grew 14% y-o-y with the home-loan book growing 12%. About half the R6,670 crore of incremental credit growth reported in the second quarter came from retail loans.

With ICICI Bank’s distancing itself from retail credit, country’s second largest private sector lender HDFC Bank, grew its retail loans by nearly 33% to R1,21,151 crore in the three months ended September 30. Of this, HDFC Bank’s personal loan portfolio stood at R15, 853 crore, up 32% from the previous year. In its interactions with media and the analysts ICICI Bank has indicated it will improve focus on retail lending and grow it to 35-40% of total assets, over the next couple of years.

Recently, the bank also introduced a 1% cashback offer on equated monthly installments (EMIs) to its new and existing home loan customers.

?ICICI Bank’s retail asset strategy is focused on secured loan products such as home and auto loans. Unsecured retail products (personal loans and credit cards) account for about 1% of the bank’s total advances. The Bank is offering these products on a selective basis to limited customer segments,? a spokesperson from the bank said.

On Thursday, share of ICICI Bank fell 1.5% at R1,076.05 on Bombay Stock Exchange.

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First published on: 09-11-2012 at 01:36 IST
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