Small borrowers stay clear of sanctioned loans as rates rise

Small borrowers or those with loans of up to *2 lakh have started to utilize less S of their sanctioned credit limits after December as interest rates rose, indicating a reluctance to take on additional debt.

- Shayan Ghosh

Calculations based on recent data released by the Reserve Bank of India (RBI) showed that from a utilization of 67.3% in December, and 66.9% in March, it stood at 65.5% in June, even as their total credit limit grew in the same period. RBI defines 'small borrowal account' as one with a credit limit of up to *2 lakh, with holders of these accounts being individuals or entities with relatively small credit requirements.

Their sanctioned loans have outpaced outstanding loans in the June quarter on a year-onyear (y-o-y) basis.

While sanctioned loans of up to 12 lakh grew 14%, outstanding loans grew a tad slower at 11.5%, the data showed.