Why ULIP mis-selling has become rampant ?

HDFC Bank’s overall retail loan shrank a little in the last quarter from Rs 5.27 lakh crore in end-March to Rs 5.23 lakh crore in end-June, even as such loans given to individuals have been rising in the broader financial system amid the Covid-19 pandemic.

According to a report by The Times of India, this came with a drop in credit card outstanding amounts, auto loans and those against securities. HDFC Bank’s credit card outstanding amounts came down from Rs 64,674 crore to Rs 60,429 crore in the period.

Retail loans could soon become the largest segment in India’s credit market. As of now, the top spot belongs to industrial loans, according to a recent Mint report.

As of March 2021, retail loans were about 29% of the total outstanding across the banks. During the pandemic, the retail segment managed to borrow more from banks than earlier, according to the Reserve Bank of India data. The other segment that also borrowed more is agriculture and allied activities.

Keeping this in mind, the banks have become cautious. In the first nine months of FY21, the banks’ outstanding personal loans were up 9.5% year-on-year to Rs 26.6 lakh crore. Consequently, service sector credits became the second-largest loan category in India fuelled by personal loans, according to a Business Standard report.

During the second wave, there was a slowdown in collections too, putting stress on retail banking.