Secured loans may help you tackle tighter credit norms, say experts

Presence of collateral allows lenders to relax their criteria while sanctioning of these loans

The financial distress suffered by retail borrowers during the pandemic is now getting reflected in higher stress in banks’ loan books. According to the data presented by the finance ministry in reply to a question in the Lok Sabha, several banks have seen their stressed retail advances (as a percentage of total retail advances) rise between March and December. Within the retail portfolio, unsecured loans are seeing higher stress.

“The stress is especially high in personal loans given to business owners,” says Arun Ramamurthy, a Mumbai-based expert on improving borrowers’ credit scores.

Tightening credit standards

The industry has tightened its