Finance Desk – According to a recent report from the Reserve Bank of India (RBI), personal loan defaults are on the rise, education loans see highest rate of defaults.
The RBI’s Financial Stability Report for June 2024 shows that non-performing assets (NPAs) for education-related personal loans at 3.6 percent. While, credit card at 1.8 percent, auto loans at 1.3 percent, and housing loans at 1.1 percent.
Experts says that the highest defaults on education loans is because of increasing number of students opting for studies abroad, particularly during peak seasons.
Despite these challenges in the education loan segment, the overall asset quality in personal loans has improved across the board.
In the housing sector, 36.5 percent increase in March 2024. Followed by credit cards at 25.2 percent, education loans at 20.5 percent, other personal loans at 19.9 percent, and vehicle loans at 18.3 percent.
The RBI’s latest data also shows a increase in credit card outstandings by 23 percent year-on-year as of April 2024, ( Decrease from 31 percent the previous year). Retail loan growth also moderated to 17.1 percent from 25.7 percent a year earlier.
The RBI has expressed concerns about the rapid growth in unsecured lending. Governor Shaktikanta Das has urged banks and non-banking financial companies (NBFCs) to enhance their internal monitoring.
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