Pvt Banks See Bad Loans Rising Until Mid-2025

Indian private banks say they expect increases in defaults on small and personal loans due to slower economic growth to continue till the middle of this year.

- Reuters

MUMBAI:

But the short nature of micro credit and personal loans, typically 12-18 months long, and tighter lending rules unveiled in November 2023 means pressure on their asset quality is unlikely to last beyond that, they add.

The gross bad loan ratios of private banks rose between 1 and 14 basis points in the October-December period from the preceding quarter to range between 1.42% and 4.7% of total loans.

India expects to log economic growth of 6.4% in the year ending in March, its slowest pace in four years.

The resulting rise in sour loans and tighter lending rules have made banks cautious about micro, personal and credit card loans in particular. That's led to a slower pace of bank credit growth in December for a sixth consecutive month.