ICRA on Stress in Unsecured Securitised Loan Pools
Why in the news
A report by rating agency ICRA flagged pressure on securitised pools built on unsecured credit, as repayments slipped in segments without collateral.
Key facts
| Segment | Collection trend |
|---|---|
| Microfinance | 97% (start FY25) to 90% (Q3 FY25); some improvement from December 2024 |
| Unsecured SME and personal loans | Weakened |
| Housing and loans against property | Steady |
| Vehicle loans | Slight dip in Q3 FY25, still stable |
| Secured SME loans | 91% to 104% in first nine months of FY25 |
Concerns
- Economic slowdown reduces borrowers’ repayment capacity.
- Overleveraging: borrowers with multiple loans are likelier to default.
- Regulation: stricter microfinance lending norms from April 2025 may curb disbursements and hurt heavily indebted borrowers.
Outlook
- Unsecured pools: high risk.
- Secured pools: stronger thanks to collateral and digital collections.
- Microfinance: further stress expected in Q1 FY26.
Exam angle
- Report by: ICRA.
- Term: securitisation, collection efficiency.
- Stable segments: housing loans, LAP, vehicle loans.