The Credit Suisse Group India (CSGI) said on Wednesday that its Indian equity indices for personal loans had dropped by over two percentage points to a five-year low.
The index fell by 1.6% to a score of 5.51 in the third quarter of 2016.
That was a sharp fall from the 7.7% average of the past three years.
According to the company, the fall was driven by “a series of factors including rising household indebtedness and the impact of demonetisation, which impacted the equity markets”.
However, CSGI said it expected the credit market to recover “as demand for personal loan products improves”, with the outlook for the Indian economy improving and a further rebound in personal loans.CSGI said that the index “continues to provide an indicator of consumer credit performance” and has been a “good indicator of future growth”.
The index has been in negative territory since mid-November, with the average score falling by almost 6 points since March.
It has since regained its previous high of 9.6 points in November, but is now at 8.2.
The company said it had “continued to provide meaningful information on the credit quality of individual borrowers” to ensure that “there is a healthy environment for credit growth and financial stability”.