RBI flags swelling slippages in unsecured retail lending, particularly among private banks

Mumbai: The Reserve Bank of India (RBI) Wednesday flagged the risk of elevated fresh slippages and write-offs in unsecured retail lending, particularly among private sector banks. Unsecured retail loans accounted for 53% of total retail loan slippages during the period.


Private sector banks contributed 76% of total slippages in unsecured retail loans, compared with 16% for state-run banks, the RBI said in its Financial Stability Report (FSR) published Wednesday.


Write-offs as a proportion of gross NPAs for private banks stood at a high 229.7%. Gross non-performing assets (GNPAs) in the unsecured retail segment rose to 107 basis points at the end of September 2025 from 100 basis points a year earlier.

One basis point is a hundredth of a percentage point.

At the same time, banks are increasingly focusing on safer borrowers and improving their risk profiles.

In gold loans, 69% of disbursements were to prime-and-above borrowers, while 69.1% went to highly rated customers. In consumer loans, private sector banks disbursed over 70% of loans to prime-and-above borrowers, while the corresponding ratio for public sector banks stood at 54% at the end of September 2025.

This metric was unchanged for private banks from a year earlier but improved from 52% for state-run banks.

"Enquiry volumes picked up in September 2025, reflecting a rebound in demand following GST rate cuts, even as the slowdown in the growth of credit-active consumers appears to have bottomed out," the RBI said.

In the MSME segment, super-prime borrowers accounted for 48.7% of total loans outstanding at the end of September 2025, followed by 28.9% to the prime segment and 22.4% to subprime borrowers.

Micro Credit

Meanwhile, credit to the microfinance sector declined for the sixth consecutive quarter, contracting 9.3% as of end-September 2025. The number of active borrowers in the sector fell by 78 lakh during the period.

"Asset quality is showing signs of improvement, with the ratio of stressed assets declining for three successive quarters," the RBI noted. However, borrower indebtedness-measured by the share of borrowers availing loans from three or more lenders-rose marginally in September 2025 after declining consistently over the past two years.