NPLs in India Microfinance Assets Close to Reaching Peak, Moody’s Says

“For microfinance, unsecured retail and SME loans, we see some pain yet to come through,” Anbarasu told ET NOW in an interview. “New NPLs in unsecured microfinance loans has increased over the past year. We may be reaching a peak.”

author-479260058
Reported by: Anurag Joshi

Updated Jun 5, 2025 14:44 IST

Asset quality of Indian banks however will remain stable though problems may persist for local unsecured credit that according to Anbarasu account for about 15-20 of banks loan portfolios

Asset quality of Indian banks, however, will remain stable, though problems may persist for local unsecured credit, that according to Anbarasu account for about 15%-20% of banks’ loan portfolios.

Loan delinquencies linked to unsecured microfinance assets may be close to reaching a peak, amid a slowdown in growth for the industry over the past two quarters, according to Alka Anbarasu, associate managing director of FI group at Moody's Ratings .
“For microfinance, unsecured retail and SME loans , we see some pain yet to come through,” Anbarasu told ET NOW in an interview. “New NPLs in unsecured microfinance loans has increased over the past year. We may be reaching a peak.”
Asset quality of Indian banks , however, will remain stable, though problems may persist for local unsecured credit, that according to Anbarasu account for about 15%-20% of banks’ loan portfolios.
Domestic banks are adequately capitalized, that would help them “fund credit growth through their own capital.”

“With return on assets reaching over 1% and return on risk-weighted assets of 1.5%, internal capital generation is enough to fund credit growth,” she said, forecasting loan expansion in “low teen” of around 11%-13%.
Local lenders should be in a position to maintain return on assets at above 1%, Karthik Srinivasan, group head of financial sector ratings at ICRA Ltd., said. “Banks also benefited from recovery of earlier problem assets,” he said.

Get the latest Business News, Stock Markets, IPO Companies News, Breaking News Events on ET Now. Watch all the big and small Share Market News on ET Now Live TV.

End of article
Brand Study
subscribe to newsletter
Get the latest financial news and personalised updates to stay ahead of the rest!

Related News

US Tariffs News Appeals Court allows Donald Trumps reciprocal tariffs - DETAILS

US Tariffs News: Appeals Court allows Donald Trump's reciprocal tariffs - DETAILS

Modi governments 11 years achievements From GST to 418 trillion economy - Quick recap of economic reforms

Modi government’s 11 years achievements: From GST to $4.18 trillion economy - Quick recap of economic reforms

Rs 2125 cr investment Big boost for Telangana UAE companies sign MoUs with 5 firms

Rs 2,125 cr investment! Big boost for Telangana; UAE companies sign MoUs with 5 firms

US-China Trade Talks Whats happening in London Donald Trumps call key negotiators all you need to know

US-China Trade Talks: What's happening in London? Donald Trump's call, key negotiators; all you need to know

Will RBI go for more rate cut soon Nuvamas take

Will RBI go for more rate cut soon? Nuvama's take