Almost 50% of retail loans offered by financial institutions, i.e. banks and NBFCs in the country are accounted for by the top 8 Indian cities as per several studies and reports. The top 8 cities include the NCR (National Capital Region), Mumbai, Kolkata, Hyderabad, Chennai, Pune, Bangalore and Ahmedabad. These are the Tier-1 urban zones which account for a whopping 46.3% of retail lending as seen in the first quarter of this year according to reports.
These 8 urban centres take up almost the lion’s share of the entire retail lending scenario in the country as seen in the Q2 2018 period as well, based on reports. This is majorly because of the higher demand for home loans and loans against property in these top 8 cities as compared to other Tier-2 and Tier-3 cities. Credit cards are also one of the most popularly used financial products in these cities and there is also high demand for two-wheeler and vehicle loans.
Retail loans have been increasing from a business perspective over the last few years. Overall, demand is much higher for home loans in tier-1 cities and metros as compared to other tier-2 and tier-3 counterparts. This study also shows how under banked the rural population is and this is where payments banks can probably make a big difference.