IDBI to disburse Rs 1000cr personal loans this fiscal

Industrial Development Bank of India's commercial banking unit aims to disburse Rs 1,000 crore worth of personal loans this fiscal "" a five-fold rise from Rs 200 crore posted in 2004-05.

The FI has already disbursed personal loans worth Rs 110 crore during the three-month period ending June 30, 2005. It plans to give a boost to marketing to attain the target.

IDBI has started wooing customers by cross selling its personal loan products to existing customers through credit scoring models, said Mohit Chobey, head - personal loans, IDBI.

The use of credit evaluation methodologies for cross selling personal loans to existing customers lowers cost of acquisition of customers by 50 per cent and also results in lower delinquencies, said R K Reddy, Fractal Analytics, which has been engaged by IDBI to help analyse customer data for cross selling personal loans.

Reddy said Fractal's analytics models seek to tap aspirational needs of customers and induce them to take personal loans for things such as a home theater or for opting to go on a holiday.

IDBI offers personal loans at rates ranging from 13 per cent to 22 per cent, depending on the credit risk perceived. The bank's bad loans portion of the personal loans portfolio is just 0.45 per cent.

Its personal loans are packaged with an in-built insurance cover. In the event of death due to an accident or disability due to an accident, the principal outstanding will be paid by the insurance company.

In the case of loss of job, up to three months of equated monthly installments will be paid by the insurance company.