 "personal loan")
The collection efficiency for personal loans has reduced from 95 per cent in June 2023 to 93 per cent in December last year on the back of higher spending by customers during the festival season and the relatively low priority of personal loan repayment, according to rating agency ICRA.
These loans are given without collateral.
Abhishek Dafria, Senior Vice-President and Group Head of Structured Finance Ratings at ICRA said the collection efficiency for this pool is expected to be around the same level in the fourth quarter.
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In October 2023, the Reserve Bank of India (RBI) Governor Shaktikanta Das flagged the high growth in certain components of consumer credit. Personal loans are a component of consumer credit.
RBI 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 interest.
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In November last year, 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 delinquencies in the securitised personal loan pools have remained range-bound, with 90+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.
