LOW PENETRATION OF CREDIT CARDS IN KERALA

The penetration of credit cards and personal loans is very low in Kerala and the state has a huge untapped potential in the sector, according to data released from the Credit Information Bureau (India). Forty six per cent of credit seekers in Kerala are less than 35 years of age. The state also has the highest number of credit applicants who are over 45 years of age. It also has a very high penetration of auto and two-wheeler loans, CIBIL Managing Director Arun Thukral told reporters here. Karnataka has the youngest population with 66 per cent of credit applicants younger than 35 years of age, he added. The number of applications for new credit has been on a steady rise and there has been a 150 per cent increase since 2010, says CIBIL data. This increase in the number of new credit applications and loans booked indicate an increased demand for credit and a bounce back by lending institutions in sanctioning new credit after the 2008 downturn. About 21 per cent borrowers in Kerala have a credit score of 800 and above and 40 per cent have a 750 and above score. Fifty per cent of borrowers in Kerala were new to credit as compared to 51 per cent rest of the country, Thukral said. Borrowers with a credit score of 700 and above have a higher chance of getting their loan and credit card applications approved by banks. The CIBIL TransUnion Score is an important predictor of the chances of a borrower defaulting on credit. Banks and financial institutions today consider the score as a crucial parameter before sanctioning any new loan. CIBIL is India's largest credit information company that maintains information on over 317 million consumer trades and 15 million commercial trades.