MC EXCLUSIVE 'First cheque bounces' at decade high in tech hubs like Bengaluru, one in 10 households unlikely to repay loans: Saurabh Mukherjea

India’s consumer credit boom may be showing its first signs of strain, with repayment stress surfacing even in secured loans such as mortgages. According to Saurabh Mukherjea, founder of Marcellus Investment Managers, “first check bounces are at 10-year high,” particularly in technology hubs such as Bangalore and Hyderabad, a revelation that came up during his interactions with banks' direct selling agents.

Mukherjea has attributed the problem to pandemic-era borrowing patterns among double-income tech households. “During COVID, a lot of families bought larger flats because both partners were working from home. Now that the job situation has turned adverse in tech, those families are finding it hard to keep up with both personal loan repayments and mortgage finance repayments,” he said on The Wealth Formula podcast with N Mahalakshmi.

The stress is not confined to housing alone. Even microfinance institutions (MFIs) are under pressure as states make loan collections harder by imposing regulations that borrowers often interpret as restrictions. “Try being an MFI lender who has to go and explain in a village in Karnataka or Bihar that what I’m doing is legitimate,” Mukherjea said, adding that the domino effect of states copying each other has created persistent challenges for the sector.

Credit cards and commercial vehicle financing too are showing deterioration. Quarterly results of lenders such as SBI Cards have highlighted rising stress, while logistics-linked CV loans are suffering from a subdued economic activity. “Interestingly, even in mortgage finance, the first signs of stress are already showing up,” Mukherjea said, citing feedback from direct sales agents.