As per news release dated 21.5.2018 issued by TransUnion CIBIL, a Credit Information Company, a study by the company has calculated that approximately 220 million consumers meet the target age range — from 20 to 69 — and income level of at least Rs. 2,50,000 per year, to be attractive to lenders foSr retail products. On this basis, it states that the total population of “credit-eligible” consumers in India is roughly 220 million, and further states that, of this eligible population, only about one-third — 72 million — are currently credit active, meaning that they have a live account with a bank or lending institution, while the remainder — nearly 150 million — are not currently credit active, but would meet the age and income requirements that would make them potentially attractive to lenders.
Eligibility for credit is a function of a potential borrower’s repayment capacity and creditworthiness. Repayment capacity is assessed on the basis of both income and expenditure cash flows, as well as assets and liabilities. Further, creditworthiness is reflected in the borrower’s track record in meeting credit and other payment obligations such as taxes and utility bill, as well as the borrower’s risk profile.
It is not correct to make age and income criteria as the primary basis for arriving at the figure of the potential eligible consumers for credit as credit is based on demand for it and is also dependent on the repayment capacity, applicant’s liabilities, including tax liabilities, availability of requisite details and documents to enable the bank to arrive at a decision in its commercial judgement with due regard to the technical feasibility and economic viability of the proposal and the creditworthiness of the applicant, in accordance with the bank’s Board-approved loan policy.
Government has taken a number of steps to make the credit-seeking experience hassle-free. These steps enabling more and more potential borrowers under credit net so as to boost the economy include, inter alia, the following:
All these steps taken by the Government have enabled India’s rank on “Ease of getting credit” in World Bank’s Ease of Doing Business Index to improve steadily from 44 in 2016 to 22 in 2018. Further, year-on-year domestic credit growth from the banking system has risen to 13.8% as on 31.3.2019, as per RBI data.
This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairs in a written reply to a question in Rajya Sabha today.