UGRO Capital's Shachindra Nath shares concerns on rise in unsecure lending

“However, we keep 30 percent of our loan book at an asset under management (AUM) level as unsecured and 70 percent we keep as secured,” he said.

The financial industry has lately been raising concerns about the potential buildup of credit risk in the realms of personal loans and credit card lending. Cautioning about this trend, India's leading banking and finance experts have also pointed out several aspects contributing to the evolving credit landscape in their interaction.

In an earlier coversation, Saswata Guha, Senior Director, Fitch Ratings, said that increasing risk in unsecured retail lending, pressure on margins due to funding costs, rising demand for personal loans, challenges in tracking the end use of funds for unsecured loans, indirect exposure to banks via the NBFC route, and the relatively higher ticket size of bank loans compared to NBFCs are the key concerns.

AM Karthik, Vice President, ICRA, echoed these concerns about personal loans, citing substantially higher write-offs, the expectation of 4-6 percent losses, higher credit costs, and a rapid growth rate in disbursements.