Navratri to Diwali: Credit flow this holiday season peaked in four years


SIGNALING a pick-up in consumer confidence following an upturn in economic activity and rapid vaccination across the country, additional credit disbursement during the holiday season this year exceeded observed credit disbursements over the past three years.

According to RBI data, loan disbursements during the two fortnights from October 8 to November 5, 2021 – this covers Navratri, Dussehra and Diwali – amounted to Rs 150,278 crore, significantly higher than in 2020, when it stood at Rs 81,361 crore in the two fortnights covering Diwali and Dussehra.

Indeed, credit disbursements this year were even higher than during the two corresponding pre-pandemic festival fortnights of 2018 and 2019, when they amounted to Rs 118,050 crore and Rs 70,799 crore respectively.

During the Diwali fortnight ending on November 5, 2021, the credit draw jumped from Rs 118,951 crore to Rs 111.63 lakh crore. Diwali’s credit demand boosted overall credit growth by 7.1 percent. Compared to that, the Diwali Fortnight ended on November 20, 2020, with a request for credit of only Rs 15,279 crore. In 2018 and 2019, during the Diwali Fortnight, this amounted to respectively Rs 77,350 crore and Rs 49,154 crore.

What has fueled this growth is the drop in Covid cases from September of this year. With the expected third wave remaining muted, companies have opened their doors and lockdown restrictions have been lifted across the country. At the same time, pent-up demand also increased sharply, leading to greater footfall in shopping malls and markets.

According to digital payment company PayU, payment by credit card saw a 66% increase in spend and a 30% increase in transactions. However, debit card payments were down, as spending and the number of transactions fell by 13% and 18% respectively. UPI was the second most popular payment method and saw a 104% increase in total spend and 72% increase in total transaction count.

Experts say the rise in credit this holiday season is the result of both a low interest rate scenario and increased consumer confidence.

The 2021 holiday season has been unique in several ways. After conservative sentiments following the brutal second wave, businesses and consumers alike have shown a more robust and optimistic consumer environment. “Online shopping festivals hosted by major online retailers, positive market recovery and relaxed travel and public event guidelines have boosted digital payments across key industries. In addition, what we are seeing in all categories is greater confidence in major spending, which is a good sign for the economy and brings us closer to digital India, ”said Hemang Dattani, manager. of data intelligence, PayU.

During the 2021 holiday season, average spending increased by 52%. Travel and hospitality saw a 105% increase in the number of users transacting during the 2021 holiday season compared to last year. This could be attributed to the relaxation of travel standards and the positive impact of mass vaccination. In this holiday season, total spending and the total number of travel transactions have increased by 61% and 67% respectively, compared to the holiday season 2020. For airlines, total spending has increased by 109%, Dattani said.

As the economy is recovering and the home buying market is expected to see growth in the upcoming festival season, banks have started the race to woo home loan customers with declines in interest rate in September before festival season.

Although the RBI has kept its policy rates unchanged at 4% in the last seven review meetings, banks led by the State Bank of India, Kotak Mahindra, PNB and others have cut mortgage rates. “The industry is also poised for even better growth, as evidenced by the registration of ownership at the very beginning of the first week of November. We are significantly better positioned thanks to proactive government measures such as the recent robust vaccination program crossing the billion mark, mortgage interest rates offered by banks as low as 6.5 percent and festive offers. leading to an increase in demand for home sales, ”said Rohit Poddar, Managing Director of Poddar Housing and Development Ltd.


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