Stress in unsecured portfolio starts showing in lenders' books
₹334 crore in Q1 of FY25 from ₹268 crore at the end of the March quarter. Sumant Kathpalia, CEO of IndusInd Bank said during its Q1 earnings call that some stress will be seen in the card business in the next two quarters. “If you look at the 60-plus and 30-plus DPDs, the 30-plus looks 7% right now.
So, it's not looking completely good. You will see some flows which will happen on the card business," said Kathpalia, adding that things are under control. DPD refers to days past due.
Until the first quarter, the management sounded cautious on growing the unsecured loan book, while denying any signs of build-up in stress in the portfolio. But the tone change in management commentary was apparent during the Q1 earnings call. The story is similar for Kotak Mahindra Bank as well.
“We have seen a certain level of stress in certain pockets on consumer, retail unsecured assets, particularly at the low-ticket levels, and in certain segments where the customer has got overleveraged," said Ashok Vaswani, chief executive officer, Kotak Mahindra Bank during the Q1 earnings call, adding that the bank is maintaining sharp focus on these segments. “Credit cost at the bank increased to 55 bps annualized and increase is largely due to losses in unsecured retail book in lower-ticket segment and select geography for micro-credit business," Vaswani said. Experts credited the Reserve Bank of India (RBI) for spotting trouble before the banks did.
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