HDFC, Axis Bank and other private banks' unsecured retail lending portfolio rising

MUMBAI: Retail loans may have been a safe haven for banks, battered by mounting corporate bad loans, but the latest earnings posted by some of the largest private sector banks reveal that the unsecured portion of such loans are growing at a blistering pace, raising the possibility of defaults.

HDFC Bank, India's most valuable lender, grew its personal loan book by 41 per cent at Rs 41,000 crore, and the bank's credit card business grew 26 per cent to Rs 21,000 crore. Personal and credit card business comprised 5 per cent of the bank's total retail book which stood at over Rs 3.2 lakh crore, but its delinquencies have risen in both these segments.

"These products have an expected loss which is higher because you are pricing in a certain level of loss," Paresh Sukthankar, DMD, HDFC Bank, said. "As long as actual losses are within what you expect for those products, it's the cost of doing that business."

India's third largest private sector lender Axis Bank too grew its unsecured lending portfolio in double digits which propped up its retail book. The bank had in the past stated that it wanted to grow its unsecured lending portfolio to 15 per cent of its retail lending portfolio.

Axis Bank's personal loan and credit card business added Rs 15,000 crore to its total retail loan portfolio. The bank, which recorded retail NPAs upwards of Rs 300 crore, is not worried about growth in retail delinquencies.

"If you look at the scale at which we have grown, the retail book and scale at which delinquencies have grown is not a cause of concern," V Srinivasan, DMD, Axis Bank, told ET.

HDFC Bank

Axis Bank