Private banks’ fresh slippages in unsecured retail loans sharply higher than peers: RBI

banks

Private banks’ share in the fresh slippages of unsecured retail loans is sharply higher than that of their peers, according to the Reserve Bank of India’s (RBI) Financial Stability Report.

Of the total fresh slippages in unsecured retail loans, private banks’ share was 78.9 percent in the second half of the financial year 2024-25.

Public sector banks had an 11.3 percent share and small finance banks had a 6.4 percent share, data showed.

Unsecured retail loans now constitute 25 percent of all retail loans and 8.3 percent of total gross advances, but their asset quality has deteriorated more sharply than the broader retail segment, the report said.

The gross non-performing asset ratio for unsecured retail loans has risen to 1.8 percent as of March 2025, compared to 1.2 percent for the overall retail portfolio.

Write-offs remained a key contributing factor to NPA reduction in the unsecured retail portfolios, especially of private banks.

Floating-rate loans

The share of floating-rate loans in the total gross advances of 14 select banks — which accounted for around 79 percent of the assets of SCBs (excluding SFBs and regional rural banks) — increased from 72 percent in March 2023 to 75.7 percent in March 2025, the report said.

The share of floating-rate loans in the retail category rose from 60.2 percent to 65.1 percent during the same period — of these, around 90 percent were EBLR loans.