India private banks see higher levels of small loan defaults until mid-2025

Indian private banks say they expect increases in defaults on small and personal loans due to slower economic growth to continue till the middle of this year. But the short nature of micro credit and personal loans, typically 12-18 months long, and tighter lending rules unveiled in November 2023 means pressure on their asset quality is unlikely to last beyond that, they add. The gross bad loan ratios of private banks rose between 1 and 14 basis points in the October-December period from the preceding quarter to range between 1.42% and 4.7% of total loans.