Personal loans have made a serious comeback in banks after the short period of dormancy. The global economic meltdown had lowered individual income and also increased risk for banks owing to which personal loans had moved away from the front row of loan products.
The present scenario shows a rise in personal income and increase in spending habits too thereby encouraging banks to move back to personal loans.
Recent data from Reserve Bank of India indicate a rise in personal loan disbursal by banks. The share of these unsecured loans forms a large part of the retail loan portfolio at about 35%.
RBI report says that although 40% of the total NPAs of banks is constituted by personal loans, there has been a year on year decline in NPAs.
According to a senior bank official , although there has been a rise in the personal loan disbursal, but due diligence is performed by banks before approving any such loan.