Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed apprehensions about the swift surge in non-housing personal loans. Data reveals that these loans, which encompass areas like credit card debt, vehicle loans, and advances against fixed deposits, have seen a consistent growth of over 20% for 15 consecutive months. In July and August 2023, their growth rate was 26.1% and 24.1% respectively.
This upward trend, despite rising interest rates, suggests a potential K-shaped economic recovery, with both affluent individuals and those facing income struggles contributing to this borrowing behavior. The concern lies in financing immediate consumption or purchasing depreciating assets with these loans.