The collection efficiency for personal loans reduced from 95 per cent in June 2023 to 93 per cent in December 2023, owing to higher festive season spending by customers and the relatively low priority of personal loan repayments, according to rating agency ICRA. These loans are given without collateral.

Abhishek Dafria, Senior Vice President and Group Head – Structured Finance Ratings at ICRA, said the collection efficiency for this pool is expected to remain around the same level in the fourth quarter.

Earlier, in October 2023, Reserve Bank of India Governor Shaktikanta Das had flagged the high growth in certain components of consumer credit, of which personal loans are a component.

RBI had advised banks and non-banking financial companies (NBFCs) to strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards in their own interest.

Later in November, the regulator hiked the risk weights for consumer credit from 100 per cent to 125 per cent, meaning lenders would have to set aside more capital for such exposures.


ICRA said the delinquencies in the securitised personal loans pools have remained range-bound, with 90+ days past due (dpd) between 1.6 per cent and 3.4 per cent. The outstanding pool of securitised loans in this category is about Rs 1,200 crore.

Secured Small and Medium Enterprise (SME) pools have outperformed unsecured SME pools in terms of collection efficiency and asset quality.

Overall, SME pools’ 90+ days dues increased from 1.5 per cent in June 2023 to 2.6 per cent in January 2024. The major contributors to this rising delinquency are the unsecured SME pools. The secured SME pools continue to report robust asset quality, ICRA said.

First Published: Mar 20 2024 | 7:54 PM IST

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