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Credit card delinquencies on the rise despite rebound in inquiries, says CIBIL

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Despite a revival in economic activity in the last few months, defaults in credit cards have been inching upwards and are expected to grow in the coming months, according to a report by TransUnion CIBIL. In November 2020, inquires for credit cards grew to 91.5% of the previous years' levels indicating a revival in consumption activity, but this has been accompanied by a rise in delinquencies which reflects the wider economic slowdown, salary cuts and job losses caused by the pandemic. "As with most major credit markets around the world, retail credit products have generally experienced an increase in serious delinquencies. In India, the delinquency picture is complicated and will take time to emerge due to the lagged effect of financial conditions, relief programs supported by lenders, and shifts in the payment priorities of consumers," the report says. It added that there is an increase in risk-aversion among lenders as the number of consumers that have access to credit has fallen to 5.6% in August 2020 from 21.8% in August 2019. As a credit score company, CIBIL defines delinquencies or defaults if the borrower has not paid their loan instalment for 90 consecutive days. The 90 days past due (DPD) delinquency rate for private banks improved to 1.07% as of August 2020 compared to 1.17% in the previous year. For government-owned banks, the 90 DPD rate stood at 2.8% in August 2020 compared to 3.08% in the previous year, whereas for non-banking financial companies (NBFCs) the 90 DPD rate grew…

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