Small towns (tierII markets) have been found to be a more lucrative business prospect for banks. With penetration of banking facilities being low, growth prospects stand high for lenders in these cities, reports rating agency Crisil.

It is expected by the agency that with increasing demand of retail loans, the penetration of financial institutions in these areas is going to see a rise.

Crisil has identified 15 such Tier II cities where the prospects of growth are very strong. These include Bhopal, Coimbatore, Indore, Jaipur, Kanpur, Kozhikode, Lucknow, Ludhiana, Madurai, Mysore, Nagpur, Nashik, Rajkot, Thiruvanathapuram and Visakhapatnam.

Out of these centers, Crisil says that 10 centers are most likely to see a rise in car loans by 20% in terms of CAGR (compounded annual growth rate).

Also, it is likely that in 7 amongst these centers, disbursements for loan against property (LAP) would see a big rise.