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<br />      <div type="image" title="The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books." agency="ANI" msid="114778648" hostid="261" caption="&amp;lt;p&amp;gt;The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books.&amp;lt;/p&amp;gt;"></div><br />Imagine this. You have a younger sibling you’re mighty envious of. And why not? Unlike you, they seem to enjoy all the freedom and money in the world. They party like there’s no tomorrow, and here you are, stuck in a boring, ultra-disciplined but responsible routine that feels completely devoid of any independence, and mostly, funds.<br /><br />But of late, things are changing. This sibling is in massive trouble and just cannot escape the parent’s wrath anymore. Long story short, the party is over, and it is time to go back home. The rising defaults on this sibling’s part have now begun pulling the entire house down, thereby attracting the regulator’s ire.<br /><br /><h2>The Wild West of <keyword id="113684" type="General" weightage="20" keywordseo="microfinance" source="Orion">microfinance</keyword> and unsecured loans</h2>It's hard to ignore the issues with microfinance and unsecured loans in India.<br /><br />Many saw them as a small gamble and ignored the rising defaults much like the younger siblings’ tantrums, and now they find themselves in hot waters. The skyrocketing instances of non-payments aren't a micro-issue anymore and are threatening the stability of the entire banking system. <br /><br />In the quarter ended September 30, 2024, 5 of India’s 8 largest private sector <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword> reported a steep rise in their bad loan book, mostly thanks to microfinance loans.<br /><br />Some banks, in a bid to strengthen their fortress against these <keyword id="142154" type="General" weightage="100" keywordseo="bad-loans" source="Orion">bad loans</keyword>, have significantly upped their provisions. For instance, IndusInd Bank set aside Rs 525 crore during July and September 2024 to battle the menace of defaults on microfinance loans, which make up about 9% of its total loan book. <br /><br />See, banks rely heavily on their interest income, which they earn from advancing loans. Any loan where the borrower has not paid interest to the bank or defaulted for 90 days or more becomes bad, i.e. an NPA, or non-performing asset for the bank. And who likes things going bad? <br /><br />Simply put, there has been a steep rise in three areas, much to the dislike of banks and MFIs (micro-finance institutions). But hey, it's mostly their doing!<br /><ol><li>GNPA ratio (gross net performing assets): The quantum of non-performing assets a bank has in proportion to its total assets.</li><li>Provision: The amount banks set aside to take care of such NPAs.</li><li>Slippage ratio: The rate at which good girls go bad, or the speed at which good loans turn into NPAs</li></ol>But how are these plaguing the Indian banking sector? And what does the road ahead look like? We decode it for you.<br /><h2><br />Microfinance: A not-so-micro-menace</h2>Microfinance loans were initially brought forth for low-income households and individuals i.e. for those who might not generally have access to traditional ways of credit, like bank loans and more. They don’t require collateral or an asset to be pledged in lieu of the loan, making it a tad bit easier for borrowers. <br /><br />As of June 2024, the amount of outstanding loans in the microfinance industry stood at a staggering Rs 4,20,256 crore. Of this, NBFC-MFIs accounted for 40% and banks made for 33% of these. <br /><br />In 2022, RBI, in a bid to inspire some competition in this space, did something radical-they did away with the ceiling on how much interest MFIs could charge their customers. Previously, MFIs could add up to 12% to their cost of acquiring funds to determine the final interest rate chargeable to the consumer. <br /><br />So, assuming that Bank A incurs a 5% cost to acquire funds for further loaning, A could charge up to 17% interest from the end consumer. So, interest rates were in the hands of MFIs, and boy, did they have a gala time with it. <br /><br />Instead of spurring some healthy competition, as RBI expected, MFIs and banks went rogue and all guns blazing, competing for the title of “Who will charge the highest interest?”<br /><br />Recently, RBI banned 4 microfinance institutions (MFIs), namely Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited, and <keyword id="20117932" type="General" weightage="20" keywordseo="navi-finserv" source="keywords">Navi Finserv</keyword> from disbursing loans effective October 21, 2024. Why? Because they were charging 14% extra interest over their original cost of funds. <br /><br />To maintain their loan books (and pockets), banks and NBFCs resorted to shady practices like netting off loans, which RBI has now advised MFIs against. Here, lenders allow borrowers to settle a previous outstanding loan by issuing them a new loan! As crazy as it sounds, it helped banks to report less of their total assets as NPAs, since the new credit would cover pending instalments of the borrower’s previous loan. <br /><br />Then there was the issue of borrowers overleveraging, i.e. taking multiple loans using different IDs from various lenders and then failing to honour any of them. The consequence? Banks and NBFCs end up with massive NPAs.<br /><br />Data from credit bureaus suggests that over the last quarter, there was a 17.2% rise in the number of borrowers who had 5 or more active loans at the same time.<br /><br /><h2>Growth &gt; Caution</h2>It's an age-old tale unfolding yet again in India’s banking sector- Icarus flew too close to the sun and eventually, fell to its death. Between April and June 2024, NBFCs microfinance portfolio jumped by 2.7%. If you see this in terms of loan sources, microfinance loans issued by banks grew by 11.2% in Q1FY25. But the same portfolio in NBFCs swelled by almost double-23.9%. <br /><br />While most of these loans had an average ticket size between Rs 30,000-50,000, there was a sharp spike in the number of loans that had a ticket size of Rs 80,000 or more. Data suggests that as of March 2024, more than 12% of all microfinance borrowers had over 4 or more active loans. <br /><br />In dating parlance, this is a classic case of borrowers going polyamorous, minus the honesty and transparency. Not the best of situations, you'd agree! <br /><br /><h2>Will banks and NBFCs stand up to this stress?</h2>If their results for Q2FY25 are to be believed, NBFCs are not handling the pressure all that well. Or even slightly well. Only a few banks like Bank of Baroda (BoB), ICICI, and Indian Bank were up for the battle, even witnessing a decline in their loan delinquencies. <br /><br />Some others, like IndusInd Bank, saw their stock dip by a massive 16.2% over the last 5 days.<br /><br />Its slippages in the previous quarter burgeoned from Rs 15.3 billion in Q1FY25 to Rs 17.9 billion in Q2. As a result, the bank pushed a staggeringly high amount of money to create an NPA cushion for itself. <br /><br />While its management has highlighted its preference for secured lending, that was hardly reflected in its actions during the quarter, where growth in unsecured personal loans remained exceptionally high at over 7% on a QoQ basis. <br /><br />Turns out, only 44% of customers in IndusInd Banks’ microfinance loan portfolio were exclusive to it. The rest 47% were, you guessed it right-polyamorous! 27% had borrowed from another lender as well, apart from IndusInd Bank, while 20% were those who had outstanding loans with two other lenders, apart from IndusInd Bank. IndusInd Bank’s credit card segment did not miss the NPA bus and accounted for 7-8% of its GNPAs. <br /><br />Canara Bank’s total slippages during the previous quarter jumped to Rs 11.1 billion, up by 24.7% QoQ, and making up for 3.6% of its total loans. As for Bandhan Bank, its gross NPA for Q2FY25 inched up on a QoQ basis, up from 4.23% in Q1, to 4.68% in the second quarter. <br /><br />IDFC Bank’s heavy provisioning for its NPAs marred its profits significantly, causing its PAT (profit after tax) to dip by 73% on a YoY basis.<br /><br />Data from ICRA Analytics suggest that the AUM (asset under management) growth in microfinance loans and unsecured (personal and business) loans by the NBFCs will moderate to 10-12% and 19-21%, respectively, in FY2025 compared to 30% and 38%, in FY2024.<br /><br />Says A M Karthik, Senior Vice President &amp; Co-Group Head, Financial Sector Ratings, ICRA, “As bank funds constitute a larger share in the overall funding of NBFCs, a slower credit flow from banks to the NBFCs will compress their AUM growth. The NBFCs in unsecured and digital lending businesses shall face a higher squeeze in funding compared to others, and the unsecured lending space will continue to be a source of stress in the near term.”<br /><br />There has been uninhibited growth in <keyword id="6051027" type="General" weightage="20" keywordseo="Unsecured-loan" source="Orion">unsecured loan</keyword>s, apart from just the microfinance segment. For instance, Axis Bank’s gross slippages jumped by Rs 4,443 crore, largely thanks to its unsecured business. The same is the case with Yes Bank, which saw 35–40% of its retail slippages emerging from the unsecured loan portfolio. <keyword id="6376194" type="General" weightage="20" keywordseo="kotak-mahindra" source="Orion">Kotak Mahindra</keyword> Bank was also quick to follow Yes Bank’s suit, with around 35%-40% of its slippages coming from credit cards. <br /><br /><h2>How is the road ahead?</h2>While RBI has just cracked its whip and served a warning at the moment, experts at Morgan Stanley believe that more changes (read regulatory lashes) are underway. Moreover, with both festive and wedding seasons underway in our country, unsecured lending might pick up momentum, much to the disdain of the calibrated approach banks have been taking towards it so far.<br /><br />But if the situation doesn't improve, RBI will not waste any time in becoming the typical tyrannical <keyword id="19897820" type="General" weightage="20" keywordseo="bollywood" source="keywords">Bollywood</keyword> headmaster who runs his dominion with an iron fist. However, that's a story for another day. <br /><br /><em>Do you have a topic in mind you'd want a simpler explanation for, or insights or personal experience to share on personal finance and more? Contact us at businessinsider@timesinternet.in.</em>

Simply Put: Is the lending party over? The dangerous tango of Indian banks with microfinance and unsecured loans

<ul><li><keyword id="19899647" type="General" weightage="100" keywordseo="iPhone-16" source="keywords">iPhone 16</keyword> can be delivered to your doorstep in under 10 minutes</li><li>The phone is available on Blinkit, <keyword id="19939136" type="General" weightage="20" keywordseo="BigBasket" source="keywords" meta.keywordsubtype="org" meta.entityname="BigBasket" meta.hostid="261" meta.entityid="BigBasket">BigBasket</keyword> and <keyword id="19939134" type="General" weightage="20" keywordseo="Zepto" source="keywords" meta.keywordsubtype="org" meta.entityname="Zepto" meta.hostid="261" meta.entityid="Zepto">Zepto</keyword></li><li>The iPhone 16 was made available for sale in India today</li></ul><br />Earlier this morning, <keyword id="19894961" type="General" weightage="20" keywordseo="Apple" source="keywords" meta.keywordsubtype="org" meta.entityname="Apple" meta.hostid="261" meta.entityid="Apple">Apple</keyword> stores in Mumbai and Delhi witnessed huge lines of iPhone buyers, ready to get their hands on the next-gen models. Apple’s iPhone 16 series went for sale in India today and the excitement around the new phones is palpable. However, what if we tell you that you can order an iPhone within the comfort of your home? <br /><br />Blinkit is selling the iPhone 16 promising to deliver it to your doorstep in a few minutes. The phone is also being sold at BigBasket. However, it is to be noted that Blinkit and Big Basket are not selling the pro variants of the iPhone 16. If you are looking for the higher-end variants, you will have to either buy from a store or order it online.<br /><br />In India, the iPhone 16 is priced at ₹79,900, while the iPhone 16 Plus is available for ₹89,900. The <keyword id="20656465" type="General" weightage="20" keywordseo="iPhone-16-Pro" source="keywords">iPhone 16 Pro</keyword> starts at ₹1,19,900, and the iPhone 16 Pro Max is priced at ₹1,44,900.<br /><br /><div type="Article" hostid="261" msid="113214171" title="iPhone 16 Pro with A18 Pro chip launched: Should you upgrade if you own an iPhone 15 Pro?" mstype="2" mssubtype="0"></div><br />Let us take a look at where you can buy all variants of the iPhone 16 and what are the bank offers available.<br /><br /><h2>iPhone 16 available in under 10 minutes</h2>Blinkit is currently selling the iPhone 16 and iPhone 16 Plus models, though only the 128GB variant is available for purchase. The higher storage options are currently unavailable on Blinkit, and BigBasket. It's still unclear if the Pro models will be added to their listings in the coming week.<br /><br />In addition to Blinkit and Big Basket, the iPhone 16 is also available at Zepto. <br /><br />Blinkit and BigBasket, meanwhile, promise to deliver the phone in under 10 minutes. On the other hand, Zepto is promising to deliver the device in about 30 minutes. <br /><br /><h2>Customer orders iPhone 16 via BigBasket</h2><br />In a press release, BigBasket shared that a customer from Koramangala, Bengaluru had ordered an iPhone 16 at 8:00 AM and received the product in just seven minutes, at 8:07 am.<br /><br />The customer, upon receiving the product, said as per the press release, “I’ve always trusted bigbasket for my daily needs and groceries. However, I was pleasantly surprised to see that they are also delivering the new iPhone 16. What topped the excitement was getting the iPhone 16 within minutes of ordering! It’s a game-changer in quick delivery.” <br /><br /><h2>Bank offers on the iPhone 16</h2>Shoppers can enjoy savings of up to ₹5000 when purchasing an iPhone 16 using eligible credit cards from Kotak Mahindra, SBI, and ICICI Bank credit cards on Amazon. To make the purchase even more convenient, no-cost EMI options are available for 3 to 6 months through most major banks.<br /><br />Meanwhile, Vijay Sales is offering various deals to select card holders of ICICI bank, SBI, HDFC bank, Kotak Mahindra bank, YES Bank, IDFC FIRST Bank and Federal Bank. EMI options are also available on the website.<br /><br /><div type="Article" hostid="261" msid="113448967" title="You can get free Apple Airpods 4 and Apple Pencil with this limited-time deal in India, details here" mstype="2" mssubtype="0"></div><br />In addition to this, Apple is also offering its popular Trade-In program, which allows buyers to exchange their old devices for a discount. Depending on the condition and model of the device being traded in, customers can receive anywhere from ₹4000 to ₹67,500 off their new iPhone.<br /><br />In addition to these savings, those purchasing an iPhone 16 will receive a complimentary three-month subscription to Apple Music, Apple TV+, and Apple Arcade, adding even more value to their purchase.<br /><br /><h2>About the iPhone 16 lineup<br /></h2><br />Apple has introduced some new features in the new iPhone 16 series, aiming to make both the standard and Pro models more advanced and user-friendly. The iPhone 16 and iPhone 16 Plus now boast a new Camera Control button, giving users quicker access to key functions. Both phones are powered by the upgraded Apple A18 chip and come with an improved dual-camera system that includes a new spatial capture feature for enhanced photography. Running on iOS 18 right out of the box, these models are set to receive further smart updates with upcoming software enhancements.<br /><br />The vanilla iPhone 16 features a 6.1-inch display, while the iPhone 16 Plus offers a larger 6.7-inch screen. Both displays are protected by Ceramic Shield technology and reach a peak brightness of 2,000 nits, though they continue to use 60Hz OLED panels. On the camera front, these models come with a 48MP main sensor capable of 2x zoom and a 12MP ultrawide camera that can now take macro shots. For selfies, a 12MP TrueDepth camera is included on both models.<br /><br />The iPhone 16 Pro and iPhone 16 Pro Max take things a step further, with bigger screens and narrower bezels. The Pro comes with a 6.3-inch display, while the Pro Max offers a 6.9-inch one. Both feature Retina XDR OLED screens with a smooth 120Hz refresh rate and up to 2,000 nits of brightness. Both phones are powered by the advanced A18 Pro chip and run on iOS 18.<br /><br />For photography enthusiasts, the Pro models pack a triple-lens setup, including a 48MP main camera, a new 48MP ultrawide lens, and a 12MP periscope camera offering 5x optical zoom. The front-facing camera remains a 12MP TrueDepth unit, and both Pro models now support 4K video recording at 120fps. Like the standard versions, they also come equipped with the new Camera Control button, making it easier than ever to snap photos and capture moments.<br />

You can get the iPhone 16 in under 10 minutes while sitting at home, here is how

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Simply Put: Is the lending party over? The dangerous tango of Indian banks with microfinance and unsecured loans

Ira Alok Puranik

You can get the iPhone 16 in under 10 minutes while sitting at home, here is how

Divyanshi Sharma

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