Easy access to credit has made borrowing simpler than ever for indian consumers, but it has also created growing financial risks. According to the latest Reserve Bank of India (RBI) report, some of the most widely used loans, including personal loans and credit card borrowings, are now among the riskiest, with default rates rising sharply.
Experts explain that while personal loans and credit cards are unsecured and fast to access, the lack of collateral makes them more vulnerable to non-repayment. Rising defaults indicate that borrowers are struggling to manage multiple debts, leading to financial stress and impacting lenders’ balance sheets.
The RBI report highlights:
· Personal loans and credit card dues show higher delinquency rates compared to secured loans like home or auto loans.
· Urban millennials and first-time borrowers are the largest contributors to rising defaults, due to overspending or over-leveraging.
· Lenders are now adopting stricter credit assessment and risk management policies to mitigate potential losses.
Financial advisors recommend that borrowers avoid taking multiple unsecured loans simultaneously and maintain a healthy repayment history. Analysts warn that unchecked growth in unsecured credit without proper financial discipline could lead to broader risks for both borrowers and lenders.
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