In a report, Assocham said that having witnessed a robust year-on-year credit growth of 17 per cent at the end of February 2020, personal loans outstanding was about Rs 25.32 lakh crore.
There is a grave challenge for borrowers to pay their EMIs on time without default and retain their credit scores, it noted.
Basing its analysis on the latest RBI data, Assocham said housing, vehicle loans and credit card segments formed the major chunk of the personal loan outstanding.
Though components like consumer durables have shown a big year-on-year growth of 43 per cent, the base was small with outstanding of Rs 6,495 crore.
''As we deep-dived into the data, the areas of concern appear to be housing, credit cards, vehicle loans and education loans. Though the RBI has granted a three-month moratorium on EMIs, deferment comes at the cost of compounding of interest as the tenure gets prolonged, " said Assocham Secretary General Deepak Sood.
The industry body said the credit card spenders were, in a way, leading the demand push and were sitting on an outstanding of Rs 1.11 lakh crore as at February-end, logging a significant annualised growth of 33 per cent.
Likewise, the housing sub-segment witnessed an annual expansion of 17.1 per cent with outstanding of Rs 13.30 lakh crore .
Even before the coronavirus outbreak , vehicle loans were acting as driver for somehow reviving the automobile demand with outstanding loans of Rs 2.21 lakh crore with growth of 10.3 per cent, it said.
The outstanding for other personal loans aggregated to Rs 7.17 lakh crore with a growth of over 20 per cent.
Assocham said though education loans had shown a negative growth of 3.4 per cent, the aggregate outstandings were large enough at Rs 66,563 crore to pose debt-servicing risks, which would only scale up in the wake of employment situation deteriorating because of the lockdown and the subsequent costs to the economy.
''The outstanding loans to be serviced in different tenures carry different rates of interest and penalty clauses. For instance, the credit card default attracts huge compounding costs. Moreover, there is not much clarity with regard to credit card outstandings in reference to RBI moratorium, " said Sood.
It further said the personal loan borrowers always remain concerned about maintaining their CIBIL credit scores.
"Most of the personal borrowers are young professionals who have long working career as also personal ambitions ahead of them. We must ensure that their concerns are addressed and their credit scores are not compromised. After all, they are a key component of the India story," said the Assocham Secretary General. KPM ANUANU