Defaults coming back to bite, banks rein in growth of unsecured credit
personal loan, credit card and microfinance (MFI) portfolios, Indian banks are slashing credit card limits and restricting pre-approved personal loans. Some of the lenders have also reduced loan-to-value (LTV) ratios on mortgage loans, bankers told ET.
«We have identified stress segments in our unsecured portfolio based on customer segment, geographies, credit scores and sectors that are showing signs of trouble,» said the retail head of a private sector lender. «We have reduced risks in these segments by lowering credit card additions, reducing credit card limits, lowering LTV and keeping away from segments which have thrown up high risk.»
Several lenders said that they now prefer offering loans to customers with credit scores of more than 750 from a cap of 720 seen prior to the onset of stress. Banks are also keeping a very close watch on days past due (DPD), where collection machinery gets triggered at day zero DPD.
«We have taken a very granular look at our own portfolio and found multiple variables which are actually the drivers of credit cost,» Arjun Chowdhry, group executive at Axis Bank had said in the post-earnings call with analysts. «Things such as the obligation to income ratios, degree of indebtedness, the number of inquiries, the nature of the loan, the nature of the geographies, the nature of the occupation, multiple things. We continue to calibrate both our acquisitions and our existing stock of loans and cards in line with what we see.»
The Reserve Bank of India has been continuously flagging
