Non-bank financiers rush in to fill unsecured loan space

As banks grow more cautious on unsecured loans on the back of increased regulatory oversight, non-bank financiers may be rushing in to fill the gap, pushing more personal loans.

- Abirami Sekar

Although non-banking financial companies (NBFCs) cater to slightly different customer categories, such as those with weaker credit scores, self-employed people and those without salary income, data from a credit bureau showed they have gained market share from banks in this segment.

A personal loan is an unsecured credit product, meaning borrowers don't need to provide any collateral, and is categorized as a consumption loan. After the central bank tightened lending norms for higher-risk categories in 2023, banks decided to go slow on advancing such loans.