RBI: Unsecured Loans Fuel Retail Slippages

Mumbai, Dec 31 (PTI) Over half of the overall retail loan sliappges are coming from unsecured products like credit cards and personal loans, the Reserve Bank said on Wednesday.

In its half-year Financial Stability Report, the RBI said the private sector lenders are witnessing higher amounts of pain in the segment than their state-owned rivals.

However, at an aggregate level, the gross non-performing assets ratio from the unsecured portfolio at 1.8 per cent remains "stable" when compared to the 1.1 per cent figure for overall retail advances, the report said.

"Slippages in unsecured retail loans constituted 53.1 per cent of the total retail loan slippages of scheduled commercial banks. Among bank groups, the share of private banks in fresh slippages of unsecured loans was higher," the report said.

Unsecured loans contributed nearly 76 per cent share in slippages for private sector lenders against 15.9 per cent for PSU banks, the RBI said.

The RBI also flagged the role played by fintech firms on the unsecured lending front, pointing out that the impairment among borrowers who have availed unsecured loans from five or more lenders was elevated.

Unsecured loans contribute more than 70 per cent of the fintechs' total loan book, and more than half of them were extended to borrowers under 35 years of age, it said.

Between September 2024 and September 2025, fintechs registered a robust growth of 36.1 per cent, largely driven by personal loans that formed more than half of their outstanding loan portfolio, the report said.

As per the report, the growth in bank lending to unsecured retail is showing signs of revival, but credit to large corporates, however, remains subdued.