Majority of retail slippages from unsecured loans: RBI

Mumbai: More than half of overall retail loan slippages are now originating from unsecured products such as credit cards and personal loans, the RBI said on Wednesday, highlighting growing stress in the segment. In its half-yearly Financial Stability Report, the RBI noted that private sector banks are facing greater stress in unsecured retail lending compared with PSBs. Unsecured retail loan slippages accounted for 53.1 per cent of total retail slippages across scheduled commercial banks.

Despite this, the aggregate GNPA ratio for unsecured retail loans stood at a stable 1.8 per cent, compared with 1.1 per cent for overall retail advances. Among bank groups, private sector lenders accounted for nearly 76 per cent of unsecured loan slippages, significantly higher than the 15.9 per cent share for public sector banks.

The RBI flagged rising risks in fintech-led unsecured lending, noting higher impairments among borrowers with loans from five or more lenders. Unsecured loans form over 70 per cent of fintech portfolios, mostly to borrowers under 35. Fintech lending grew 36.1 per cent in a year, driven by personal loans, while large corporate credit stayed weak. Agencies