RBI Warns: Unsecured Loans Drive India's Highest Default Rates

• RBI's Financial Stability Report highlights unsecured loans (personal loans, credit cards) as having India's highest default rate.
• Unsecured retail loans constitute 53.1% of all retail loan defaults, with private banks significantly more exposed (76%) than public sector banks (15.9%).
• Fintech lenders contribute significantly, with over 70% of their loan book in unsecured credit, often to young borrowers under 35.
• Credit card NPAs reached Rs 6,742 crore, driven by overspending and job losses; personal loans also show high stress, especially for small amounts and young borrowers.
• Borrowers with five or more unsecured loans face heightened repayment stress, particularly in tier-2 cities and rural areas.

Why It Matters: RBI warns unsecured loans like credit cards and personal loans have India's highest default rates.