Unsecured loans come back to haunt private banks after 13-year gap

Banks are again facing stress in the unsecured loan segment, after a gap of 13 years. Most private banks that had grown their unsecured loans portfolios like credit card and personal loans aggressively in the last few years are now seeing repayment falling overdue in the October-December quarter. However, those loans have not been classified as non-performing asset (NPA) due to the Supreme Court order in September that directed banks not to classify loans as NPA, which were not declared as NPA as on August 31, till further orders.

Axis Bank – the third largest private sector has reported proforma slippages of Rs 6,740 crore, of which 84 per cent of proforma slippages are from the retail book, which is equally