Banks target weaker borrowers as credit growth slips: Why it's a risky bet

Unsecured loans can only offer banks a temporary shelter during a downturn in collateralised credit

Any financing that’s secured by collateral — steel mills, textile factories, power plants, roads or land — is in trouble in India. A multiyear investment slowdown has decimated credit quality. Now, the problem is spreading. The  near-recession in the consumer economy means unsecured lending could be the next domino to fall. 

With business collateral losing its sheen, India’s top three private-sector banks have been expanding their credit card and personal loan business at 30 per cent-plus rates, double the pace of growth in their corporate loan book. They can’t keep up for long. If they try, they would only be storing