The lenders get in touch with CICs while doing diligence on every credit proposal, which triggers in inquiries.
It can be noted that many analysts have said that a large share of the incremental credit demand is coming from the more aggressive private sector lenders who also have larger capital buffers.
“Public (sector) lenders saw the biggest rebound in inquiries in July and August 2020, most likely because they were early in recommencing operations than their private and NBFC (non-bank finance companies) counterparts,” the report by Cibil said.
Inquiries from over a dozen state-run lenders for the two months were at 102 per cent of the same observed in January-February this year and 118 per cent of that in the same period a year ago, it said.
The same numbers for the private sector lenders were at 70 per cent and 78 per cent, respectively, while for NBFCs and housing finance companies, inquiries were much lower at 51 per cent of the pre-COVID period in January-February and 57 per cent of the levels observed in July-August last year.
At a system-wide level, inquiry volumes rebounded in July-August, but were still lower than the pre-COVID period, the report said, adding that as of August 2020, the inquiries were at the same level as during April 2018.
It also said that a lot of demand seen in July-August was pent-up loan demand which had been affected due to the coronavirus-induced lockfowns.
In what can be called as a welcome step, a bulk of the inquiries were for secured lending products like mortgages, auto loans, while those for unsecured ones like personal loans and credit cards were trending lower.
It can be noted that concerns over asset quality have been raised following instances of job losses or salary cuts as a result of the pandemic-induced economic contraction.
As cities continue to dominate the data of new COVID-19 infections, a larger proportion of inquiries came from rural and semi-urban areas, Cibil said.
The share of metro areas in credit inquiries fell to 37 per cent in July-August as against 41 per cent in the same period a year ago and 40 per cent in January-February this year, it said.
Share of inquiries from rural pockets increased to 17 per cent during the two unlock months from 15 per cent in July-August 2019 and 16 per cent in January-February 2020, it said.