The concerns on the growth in unsecured personal loans has bottomed out and there will be growth in the space from here on, State Bank of India Chairman CS Setty said on Tuesday.
"On the retail personal side, home loans are doing very level," Setty said at at the NDTV Profit Conclave in Mumbai. "The concern has been the unsecured personal loans. I believe that has bottomed out."
The deceleration in the segment has not only happened because of the Reserve Bank of India's increase in risk weights but other factors like the relook in the lenders' models of underwriting, according to Setty.
This has come as there was a build up of leverage in the small-value loans, particularly from Rs 50,000 to Rs 1 lakh for the new to credit customers, he said.
"Frequency of bureau data refresh, which is now currently happening in 15 days, means that there is greater visibility of leverage at the individual and family level. So, this will prevent multiple borrowings and eventual defaults at the new to credit segment," he added.
As of December 2024, the banking system's credit growth was over 12% on year as against personal loan growth of 15%, the RBI data showed. In the same period a year ago, it was nearly 16% and nearly 18% respectively.
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