Ratings agency CRISIL said that Indian retail loan quality has deteriorated with rising interest rates, and some lenders could suffer significant losses.
The agency expected gross non-performing retail loan assets to increase to around four per cent of total retail loans by March 2009 from 2.7 per cent in March 2007.
“The system as a whole can absorb this, but lenders who are heavy on unsecured loans and on high-risk customers will suffer significant losses,” Tarun Bhatia, head of financial sector ratings at CRISIL, said in a statement.
Retail credit comprises a major portion of several top private sector banks including ICICI Bank and HDFC Bank.
