File photo

MUMBAI: HDFC Bank unsecured loan portfolio has crossed Rs 1 lakh crore, which is nearly 14% of the bank's advances portfolio. Considering that the bank's push into this segment began around 2015 with its instant digital loans , the expansion makes it the fastest growing segment.

"With monthly disbursements of over Rs 8,000 crore we have now reached an inflection point," said Arvind Kapil, group head ( unsecured loans , home and mortgage loans). "HDFC Bank has expanded the competitive boundaries of this business by growing the loan portfolio through faster turnaround time even as delinquencies in this segment are controlled at around 0.48%," said Kapil. Incidentally, the bank's unsecured loan defaults are lower than non-performing assets the industry has witnessed even in secured loans such as home loans .

The unsecured loans comprise both personal loans to salaried and loans to small businessmen. While the average ticket-size of the personal loan is around Rs 3.5 lakh, it is twice that for business loans. Kapil said that the key differentiator was the turnaround time. Although delinquencies were low, the bank has better margins on these advances considering that interest rate ranges between 11% to 13.5% for salaried borrowers and up to 15% for business loans.

In 2015, HDFC Bank introduced the 10-second scheme where customers were disbursed loans based on appraisals done by software. The analytics engine computes eligibility by pulling down the customer's credit score and existing liabilities and ascertaining frequency of cash flows into the bank account. The bank is working on developing capability for disbursing loans to non-customers.

