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Thursday, November 2, 2023

Small personal loans that drove retail lending see signs of stress

Small-ticket personal loans, valued at less than Rs 50,000, have become the fastest-growing segment in retail lending. However, a study by TransUnion Cibil has shown that borrowers of these loans are more likely to default. The delinquency rate for consumers with small-ticket loans was 5.4%, compared to 4.2% in Q2 2022. Despite this, delinquencies in this portfolio have had a minimal impact on overall retail loan books. Lenders need to closely monitor these loans as consumers may prioritize other payment obligations over personal loan payments, indicating financial stress.

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