MSME, retail loans pose higher slippage risk for lenders: RBI FSR

The second Covid wave has sharply affected credit demand, with a steep fall in inquiries across product categories in April 2021

Showing up the effects of the second wave of Covid, the consumer credit aka retail and loans to MSMEs could pose higher slippage risk for lenders in the coming quarters.

The financial stability report by Reserve Bank of India said going forward, close monitoring on asset quality of MSME and retail portfolios of banks is warranted.

Consumer credit deteriorated after the loan moratorium programme came to an end in September 2020. Customer risk distribution of the credit active population underwent a marginal shift towards the high-risk segment in January 2021 relative to January 2020.

In terms of credit risk migration,