Reserve Bank of India’s lending rate data shows that the personal loan interest rate is witnessing a gradual downtrend since 2012. The lending rate by the Indian banks (public, private, and commercial) and financial institutions started dropping in 2012. Still, the downtrend became steeper in the last five years.
Personal Loan Interest Rates and Industry Growth in the Last 5 years
At the beginning of 2012, the average personal loan interest rates were hovering around 12.5%. Bank Group-wise Weighted Average Lending Rates (WALR) came down to around 11% at the beginning of 2017. In the last 5-years, the WALR on outstanding Rupee loans has dropped to 8-9%. This means that the personal loan interest rates and processing fees have dropped by 2-3% in the last five years (2017 to mid-2022).
This drop in the interest rate on personal loan in mumbai has helped the loan market grow by leaps and bounds. In terms of volume, the overall personal loans portfolio has jumped by almost 4-times in the last 5-years. In terms of value, the same has seen a growth of nearly 2.5-times during FY 2017-2021. Small-ticket personal loans have increased by 11.5-times in terms of volume and 3-times in originations by value during the 2017-2021 financial years.
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