Around 16 months ago, the central bank took measures to rein in credit offtake, which was largely fuelled by uncollateralised retail advances. Those steps appear to have helped derisk the broader credit environment, as higher risk weights tied to such exposures helped limit loan disbursements. Expansion in credit card dues, as high as 34% in November 2023, declined to 13% in January 2025.

Similarly, loans to nonbank lenders, which climbed 21.5% in November 2023, expanded 7.7% in January 2025. In November 2023, the Reserve Bank of India (RBI) increased risk weights on loans to non-banking financial companies (NBFCs), unsecured loans, and credit cards.


The move was intended to encourage banks to be more prudent when lending to these segments. Unsecured lending, which climbed 24% in November 2023, slowed to 8% in the current fi scal year until January. The regulator’s primary concern was the asset quality of banks.

Since these loans are not backed by collateral, the recovery is minimal, which affects banks’ bottom lines. To be sure, after a visible moderation in these credit categories, the RBI restored the original risk weights for bank loans to NBFCs to 100%, from the earlier 125% for loans starting in FY26.