Banks, NBFCs shift focus away from unsecured loans to loan against property

As stress continues to linger in the unsecured segment of retail lending, LAP has emerged as an attractive avenue for banks and NBFCs besides gold loans

Amid rising stress in unsecured lending, banks and non-banking financial companies(NBFCs) are turning towards loan against property, a secured lending retail product. Further, with a rising push towards lending to the micro, medium and small enterprises (MSME) sector, the loans against property (LAP) portfolio has seen a significant growth as loans to MSMEs are also classified under the LAP portfolio.

 

According to a recent CareEdge report, the MSME LAP market has grown over 50 per cent, from Rs 7.5 trillion to Rs 11.3 trillion over the past two years. Within this, the micro-LAP rose by 60 per cent to Rs