Business: Personal loan NPAs to rise from Rs 7,422 crore in 2022-23 to Rs 11,210 crore in June 2024

The personal loan and credit card segment has seen a significant increase in NPAs. NPAs in the personal loan segment increased by 51 per cent or 0.93 per cent from Rs 7,422 crore in March 2023 to Rs 11,210 crore in June 2024 (1.16 per cent). According to RBI data, NPAs of personal loans increased in the three months till June 2024 and this figure increased to Rs 9,688 crore in March 2024. In the period from March 2024 to June 2024 alone, personal loan NPA increased by more than Rs 1,522 crore. Whereas in the period from 2019-20 to June 2024, credit card NPA has increased by 136 percent. Credit card NPAs increased from Rs 2,404 crore (1.82 per cent of advances) in March 2020 to Rs 5,679 crore (2.04 per cent of advances) in June 2024. In response to a media query under the Right to Information Act, the Reserve Bank of India said that NPAs in the credit card segment increased by 39.46 percent in June 2024 compared to March 2023.

Recently, Indian banks have released figures claiming that there has been a decline in non-performing assets (NPAs) or loan defaults in the last two years. Indian banks are patting themselves on the back regarding this claim. But a deep study of the data shows that the reality is something else and the claims of Indian banks prove to be false. The flip side of the increase in NPAs reflects the worryingly increased debt burden of borrowers. This situation is having a negative impact on the growth of the banking sector.

According to experts, both personal loans and credit card dues are generally unsecured and both carry high interest rates. When loan installments are outstanding for more than 90 days, such a loan is considered NPA.