Mumbai: Credit analysts are keeping an eye stress signs in household debt in India after unemployment rose to a 45-year high and as lenders grapple with the worst soured debt levels of any major economy.
The bad debt malaise has centred on corporate debt, and loans to individuals have been seen as safer and a growth opportunity for banks. Given the slowdown in the economy and a drying-up of credit from NBFCs, analysts are signaling potential risks, though data on personal loan arrears is sparse.
“There’s stress building up for sure in retail loans,” said Saswata Guha, Direc-tor for Financial Institut-ions at Fitch Ratings. “Whether it manifests into higher defaults will depend on how the economy shapes from here.”
The economy has slowed sharply on the back of weak consumption. Defau-lts have increased funding pressure at non-bank financiers. That’s curtailing their ability to provide loans, and having knock-on effects for consumption, according to Fitch.
“We could see trouble among individuals to repay their loans if the stress in the economy rises,” said Dwijendra Srivastava, CIO-Debt at Sundaram Asset Manage-ment Co. —Bloomberg