Retail loans, long a safe bet for many banks, show uptick in defaults

HDFC Bank, ICICI Bank and Axis say bulk of the loans marked substandard in April-June was in retail category, but expect turnaround as lockdowns end.

Bank loans to individuals stayed healthy in the last decade when corporate defaults rose sharply, but as the coronavirus pandemic ravages the economy this retail category of lending is showing stress.

Private sector lenders ICICI Bank, HDFC Bank, Axis Bank and IndusInd Bank, in their April-June earnings, reported that the bulk of the loans marked as sub-standard asset was in the retail category. Many states imposed lockdowns in April-May to contain the spread of Covid-19, hurting loan repayment collections that led to slippages rising in retail.

ICICI Bank, India's second largest private sector lender, added Rs 7,231 crore gross non-performing assets (NPA)