India’s retail-loan defaults are rising as aggressive lending faces scrutiny. Personal loan growth slowed sharply to 14% in August from over 30% last year, after the Reserve Bank tightened risky lending rules.
Lenders like Kotak Mahindra Bank and IndusInd Bank have reported higher stress in unsecured loans, with their stocks reflecting the pressure. Ujjivan Small Finance Bank, which focuses on small loans, has seen its stock plunge over 30% this year. Analysts warn that loan defaults could remain elevated over the next two quarters, potentially extending economic stress if demand fails to revive.