Unsecured personal loans jumped 4-fold to Rs 13.3 trn from FY17 to FY23

Unsecured personal loans jumped more than four-fold to Rs 13.32 trillion as of March 2023 from Rs 4.26 trillion in March 2017, as per a report.

Overall, the number of personal loans has almost tripled during this period to Rs 51.7 trillion, an analysis by Care Ratings revealed.

This means the personal loan books of banks and non-banks almost grew 1.5 times between FY17 and FY23, and now constitutes 30.3 per cent of the overall credit of Rs 170.5 trillion as of March 2023, the report said.

At the end of FY17, the amount was Rs 18.6 trillion, or 21.5 per cent of the overall loan book, it said.

Of the total personal loans, unsecured loans jumped more than four-fold to Rs 13.32 trillion as of March 2023 from Rs 4.26 trillion in March 2017, according to the agency, recording a growth rate of 23 per cent in the final year over FY22, when it stood at Rs 10.81 trillion.

It attributed the surge in numbers to deepening income crises, and pushing of credit by fintechs and their NBFC lending partners in an unprecedented manner.

Personal loans are typically consumption loans and are unsecured in nature, which constitute nearly a third of the total bank credit.

The recent move by the Reserve Bank of India to hike the risk weight by 25 percentage points to deter high consumer credit growth is expected to impact the momentum in growth in the immediate to near term, the report said.

The overall credit of banks and NBFCs grew 12 per cent annually from FY17 to FY23 to Rs 170.5 trillion, and grew more than 23 per cent during the current fiscal, it added.