Banks renew push for unsecured lending as margins shrink

and given out to borrowers.

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Several private and public-sector banks said they now plan to step up growth in their unsecured portfolios.

(ISTOCKPHOTO)

Banks’ NIM moderated to 3.1% in 2024-25 from 3.3% in the previous year, as per the RBI's Report on Trend and Progress of Banking, dated 29 December, which showed that median NIMs remained highest for private banks, followed by foreign banks, while PSU banks exhibited relatively uniform margins with limited cross-bank variation.

Against this backdrop, several private and public-sector banks said they now plan to step up growth in their unsecured portfolios

“The overall growth is slightly weaker and personal loan is one segment which also gives them a kicker on the yield side. There are many critical products on that side, and banks actually make quite a bit of risk-adjusted profit compared to a normal loan. So, this remains a fairly attractive product,” said Prakash Agarwal, partner - Geofin Capital, adding that the higher-yielding nature of unsecured loans is also likely driving banks’ interest in the segment.

The NIM for banks has been steady to slightly better in the December quarter (Q3FY26). HDFC Bank posted an 8-bps sequential improvement to 3.35%, while ICICI Bank's remained unchanged at 4.3%.