Among banking groups, the share of PVBs (private sector banks) in new unsecured loan slippages was higher | Photo credit: phakphum patjangkata
The slippages in these loans constituted 51.9 percent of the total slippages in retail loans of SCBs at the end of September 2024.
While asset quality remains stable overall — the GNPA (gross non-performing assets) ratio stands at 1.8 percent against 1.1 percent for private advances — slippages in unsecured private loans constituted 53.1 percent of SCBs’ total private loan slippages, according to the latest half-yearly report.
Among banking groups, the share of PVBs (private sector banks) in new unsecured loan slippages was higher, and their write-offs remain high, it added.
At end-September 2025, the slippage ratio in unsecured retail loans was lowest for public sector banks (PSBs) at 1.4 percent, followed by PVBs (4.7 percent), foreign banks (6.8 percent) and small finance banks (10.4 percent).
As slippages in unsecured private lending increased, PVBs resorted to large write-downs, even as recovery rates remained subdued.
“Over the past few years, unsecured loans, especially small ticket loans and borrowers with multiple loans, have grown exponentially until the RBI cautiously intervened in November 2023 and increased risk weights.
credit acceptance
“During that period of high growth, the stringency of credit underwriting standards had diluted. The higher slippages will gradually diminish once the portfolio is rebalanced with a reduction in subprime lending,” said Hari Hara Mishra, CEO of the Association of ARCs in India.
The FSR noted that growth in bank lending to NBFCs (non-banking finance companies) and unsecured retail sector, where risk weights were increased in November 2023, is showing signs of revival, with 8.5 percent and 6.2 percent annual growth respectively from September end 2025.
Among different product types, gold loans witnessed sharp growth among SCBs and NBFCs. Gold loans constitute 5.8 percent of the total advances of SCBs and NBFCs.
The share of outstanding loans from sub-prime borrowers (56.8 per cent) in the NBFCs’ gold loan portfolio fell but remained significant.
In the case of both banks and NBFCs, outstanding loans from higher quality borrowers dominated the unsecured corporate loan category, at 69.1 percent and 68.6 percent, respectively.
Published on January 1, 2026
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