
Private banks in India have sustained their expansion in personal loan portfolios during the September-December quarter, even after the Reserve Bank of India (RBI) raised risk weights for unsecured loans.
Varied Growth Rates Across Leading Banks

Leading banks such as ICICI Bank, Kotak Mahindra Bank, and Axis Bank have reported year-on-year (yoy) growth in their personal loan books, ranging from 28% to 37%. Others like IndusInd Bank and Federal Bank have exhibited more aggressive growth, with increases of 57% and 86% yoy, respectively. The largest private lender, HDFC Bank, saw a comparatively slower growth at 10% yoy.
HDFC Bank’s personal loan portfolio jumped by 10 percent to Rs 1.81 lakh crore in the December FY24 quarter. ICICI Bank’s personal loan portfolio grew 37 percent to Rs 1.04 lakh crore, while Kotak Mahindra Bank’s unsecured loan portfolio grew 32 percent to Rs 41,712 crore. On a sequential basis, the country’s largest private sector bank saw 3.3 percent growth, with the total personal loan portfolio standing at Rs 1.82 lakh crore.
In the same quarter, public sector bank (PSB) Union Bank of India reported growth of 11 percent, with the total personal loan portfolio standing at Rs 11,447 crore.
Focus on Higher-Ticket Segments and Existing Customers
Bankers emphasize that the rise in lending has not been significant in the low-ticket segment (below Rs 50,000), where perceived risk is higher. Instead, banks are extending loans to existing customers with a healthy credit history. ICICI Bank, for instance, has refined credit parameters and taken steps to address specific cohorts contributing to delinquencies.
Measures Taken by Banks to Manage Portfolio Quality
Banks are implementing measures to manage portfolio quality. ICICI Bank has adjusted sourcing payouts and revised pricing on personal loans. The Group Chief Financial Officer mentioned that growth in the portfolio may moderate, given these adjustments.
Concerns Raised by RBI and Regulatory Response
In response to the sharp rise in personal loans, the RBI increased risk weights on secured loans in November. The directive applied to unsecured personal loans, credit cards, and lending to non-banking financial companies (NBFCs). The move aimed to slow the pace of unsecured loans by raising the cost of funds for lenders. RBI Governor Shaktikanta Das expressed concerns about unbridled growth in personal loans and advised lenders to exercise caution in unsecured lending.
Banks’ Strategic Focus and Margins
Despite regulatory changes and concerns, experts believe that banks will continue to prioritize personal loans due to their high margins compared to other secured loans. Ajit Kabi, Research Analyst at LKP Securities, notes that the high yielding nature of personal loans makes them an attractive option for banks, prompting them to persist in unsecured lending.
I took 2 crore unsecured loan and will never repay back.