Unsecured retail loans burgeoned on banks' books in Covid-19's aftermath

As regulated entities expand the retail portfolio and tap the new-to-credit segment, more through unsecured loans and with less-than-ideal emphasis on credit histories, delinquencies could rise

On October 6, the Reserve Bank of India (RBI) advised banks to be cautious towards unsecured loans.

“Certain components of personal loans are recording very high growth. These are being closely monitored by the Reserve Bank for any signs of incipient stress,” said RBI Governor Shaktikanta Das while announcing the review of the monetary policy. Deputy Governor Swaminathan J pointed out that unsecured retail credit saw an “outlier” growth of 23 per cent in the past two years, compared to an overall credit growth of 12 to 14 per cent.

The genesis of this incessant rise of retail, as of many other