Rising share of unsecured loans in NPAs a worry

Share of these loans in fresh NPAs a whopping 60%

- SACHIN KUMAR

THE BANKING SECTOR is stable and well capitalised, the Economic Survey noted, even as it raised red flags about the rising share of unsecured loans in non-performing assets.

While gross non-performing assets (NPAs) of the banking system hit a 12-year low of 2.6%, concerns are mounting over unsecured personal loans and credit card defaults, the Survey said. As of September 2024, 51.9% of new NPAs in retail loans originated from slippages in the unsecured loan book.

According to the Reserve Bank of India's latest financial stability report, nearly half of the borrowers with credit cards and personal loans have another active retail loan, often substantial, in the form of a housing or vehicle loan.