Consumer finance has immense potential and is a highly remunerative and bankable activity, especially in an environment of falling interest rate. However, there are issues like credit bureau mechanism, tie-ups with suppliers, product innovation and consumer protection.

India is considered to be the second fastest growing country in the world, the first being China. Of late, India has emerged as a pre-dominantly industrialized and service sector focused economy. The consistence growth rate over the last couple of years proves this fact to be true. Liberalization of the economy matched with a young population has led to increase in the incomes and purchasing power. International brands and trends have captured the minds of young population. Aspiring for better quality products, fast changing life style and higher expectations to grow in life have become the order of the day. A common man, who had a strong aversion to credit, is now in favor of credit for convenience in shopping, for financing housing, automobiles and consumer durables and even holidays. The conventional conservative mindset has changed and borrowing against the future income is now a widespread phenomenon in India.

The Indian consumer has an opportunity to select from an array of financing schemes offered by a large number of banks and other financial institutions. Commercial banks have now entered into an understanding with non-banking finance companies to meet the growing demands for consumer finance as a result of increased product offerings in consumer goods. The rapid growth in the availability of consumer finance has matched the supply of products in the country. The drawback is that, the retail loan boom will mount the indebtedness of the households. The results of various studies reveal that, this might have already happened. Credit card defaults are on the increase. This could have negative implications for the sustainability of private consumption and domestic savings over the medium- to long-term.

Consumer Finance Boom in India, Automobiles Industry, Non-banking finance companies, Commercial banks, State Bank of India, SBI, Karnataka Bank Ltd., Public sector banks, HDFC, Marketing and Research Team, MART, Indian Banking System, ICICI Bank.