business: Personal Loan Bhav: In the last few months, several private lenders such as ICICI Bank, Kotak Mahindra Bank, HDFC Bank and Axis Bank had hiked interest rates on personal loans (PL) after the Reserve Bank of India (RBI) deemed them riskier in November 2023. Revealing data from banks’ disclosures, the report said that personal loan limits have increased by 30-50 basis points. In November last year, the central bank had raised some concerns over the excessive growth in unsecured loans and made lenders more cautious and increased the risk weight of personal loans to prevent them from lending too much to these lenders.
The RBI had increased the risk weight of personal loans from 100 per cent to 125 per cent in November 2023. For credit card loans, it was increased from 125 per cent to 150 per cent. ICICI Bank is now offering personal loans at an interest rate of 10.80 per cent, compared to 10.50 per cent earlier. -Kotak Mahindra Bank offers personal loans at interest rates starting at 10.99 per cent, compared to 10.50 per cent at the end of last year. -HDFC Bank’s personal loans come at an interest rate of 10.75 per cent per annum from April, compared to 10.35 per cent between January and March this year. -Axis Bank offers an interest rate of 10.99 per cent on personal loans, compared to 10.49 per cent at the time of RBI’s risk announcement. According to RBI data, retail loan growth stood at 17.8 per cent in May 2024, compared to 19.1 per cent in May 2023. Growth in unsecured personal loans such as ‘credit card retail’ declined from 34.2 per cent in November 2023 to 23 per cent in April 2024.
