Uneven access to formal credit can set our economic goals back

India must chart a path for small-ticket formal credit if it is to realize its Viksit Bharat ambition

- Ruching Goyal & Hardik Shah are, respectively, managing director and senior partner; and managing director and partner, BCG

Unsecured lending has grown at 25% over the last four years, twice as fast as mortgage loans. In certain pockets, this growth came at the cost of borrower over-leveraging and loan stacking. Potential fraud has also risen sharply. This is especially true with young digital borrowers. The regulator predicted this risk way before lenders started applying the brakes and market exuberance began to ebb. That stance was vindicated by a spike in loss rates among lenders.