In unusual times, some Interesting trends in credit
In retail loans, credit cards were worst affected, with NPAs shooting to 3.5% in FY21
In an earlier article, we had discussed the improvement in credit rating ratios (upgrade-downgrade ratios) of rating agencies. This was despite the economy going through stress, gross domestic product having de-grown by 7.3% in 2020-21 and the scenario being bolstered by various support measures such as moratorium on loans, one-time restructuring and National Company Law Tribunal (NCLT) action being kept in abeyance till March 2021. Since then, partial stress has emerged in an unusual quarter: retail loans, which have the best (i.e. lowest) default rate, and MSMEs (micro, small and medium enterprises).