(wl-3275)-Are There Reasons to Worry?: Retail Lending and Commercial Banks

For sometime a major driver for the Indian banking sector turned out to be their retail loan portfolio. To go back a bit in its evolution, since the decade of 2010’s, issues relating to corporate bankruptcy and associated formation of non-performing assets ailed the Indian banking sector. In search of new avenues for business, banks leaned over retail credit as a new growth driver. With a boost under the Union budget, banks conscious efforts to aggressively market certain type of retail loan, earned the confidence of the lenders as a stable source of income. Sustained high growth in the unsecured category of retail loans was seen as a cause of concern more so when it’s share in Non Food credit has risen to 10 per cent in 2023. Regulatory controls, studying socio economic attributes of the borrower, and having some insights into the end use of funds will make these “all- rounder” loans appealing to the lender with minimum risk.