IndusInd Bank, a private sector bank, has decided to offer personal loans only to customers with corporate salary accounts as a preventive measure against defaults.
Of the bank’s total loan book, 58 per cent accounts for vehicle finance loans, 13 per cent for other retail loans and balance for wholesale (corporate) loans. According to the RBI data, personal loans grew 23 per cent year-on-year to Rs 87,944 crore as on May 25, 2007.
Estimates by analysts say that level of delinquency in the personal loans segment range from 10-20 per cent. This has led to banks tightening their due diligence of marketing agents and also reviewing recovery strategies.
Banks and NBFCs are focusing on unsecured loans products as the yield in this business is high which covers for any defaults. Interest rate on personal loans currently varies from 14 per cent to 30 per cent.