RBI insecure about unsecured loan surge
Between FY18 and H1 FY24, credit card loans trebled to ₹2.2 lakh crore while personal loans grew 2.5 times to ₹13.4 lakh crore
Between FY18 and H1 FY24, credit card loans trebled to ₹2.2 lakh crore while personal loans grew 2.5 times to ₹13.4 lakh crore
Such concentrated linkages may create a contagion risk, says Shaktikanta Das
The RBI has increased the risk weights on unsecured consumer loans, including credit cards, by 25% for both banks and NBFCs.
This excludes housing loans, education loans, vehicle loans, loans secured by gold and gold jewellery, and microfinance loans
Housing loans account for more than 48% of personal loans for banks as of December 2022, as per the RBI data.
‘Personal loans’, rather than credit to agri, industry, and services, remains at the top and drive credit offtake, which needs to be corrected to avoid low-middle income trap and stalling growth
Prolonged cheap credit regime has led to a clear liquidity trap and irrational stock market boom, both of which are bad for the economy.
With most industries having made a hard stop, the ‘productive on-lending’ that the RBI envisages may remain a pipe dream.
The increase in delinquency rates was not uniform; It was most pronounced for loans against property, home loans, and credit cards. Overall delinquencies improved for auto loans.