India's retail credit growth moderated in the June quarter as financial institutions tightened the supply of credit, particularly on consumption-led products like credit cards, consumer durable loans, and personal loans, a report said on Monday.

A TransUnion CIBIL Credit Market Indicator (CMI)1 report said that there was a "continued decline in new-to-credit (NTC) volumes, especially when younger consumers are entering the credit marketplace for the first time".

The share of originations for NTC consumers has declined consistently over the past five years. The share of NTC consumers in originations dropped from 16 per cent in the quarter ending June 2023 to 12 per cent in the June quarter. The report showed overall originations continued to grow at a moderated rate, home loan originations dropped by 9 per cent in volume, while credit card originations declined by 30 per cent YoY. Two-wheeler loans were the only credit product that had double-digit growth in volume and value originations.

Credit performance continued to improve across most products, except for credit cards.

However, growth moderated across all credit products, particularly on small-ticket loans.

Rajesh Kumar, MD and CEO of TransUnion CIBIL said that with "timely regulatory guidance and given the relatively high credit-deposit ratio, we are witnessing a moderation in retail credit growth".

"Sustainable credit growth can be achieved by identifying and providing access to credit for these New-to-Credit consumers using information analytics and technology-based solutions. Emerging pockets of deserving consumers exist across India’s socio-economic categories and geographies and will be the channels of profitable growth and financial inclusion," he added.

The CMI for June 2024 was 101, which was the same as that in June 2023. The indicator has remained consistently above 100 since June 2022, highlighting healthy retail lending trends in India, the report said.