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Credit card defaults rise by Rs 951 cr: What happens when you default

Credit card defaults have risen by Rs 951 crore, to Rs 4,073 crore in FY23 from Rs 3,122 crore in FY22, according to data obtained from the Reserve Bank of India (RBI) under the Right to Information (RTI) Act.

Although the retail segment played a critical role in the bank credit recovery process, the concentration of banks’ loan portfolios in unsecured lending can have serious macroeconomic and financial implications.

The RBI has raised concerns over this rise in unsecured lending on financial stability. In addition to this, the RBI has highlighted concerns over the growing risk of delinquencies on unsecured loans amidst high-interest rates and high inflation.

"Credit cardholders have increased their leverage in the last two years. While the incremental amount outstanding on credit cards has almost quadrupled from FY21 to FY23, transaction value on credit cards has doubled during the same period," said a study by TruBoardPartners.

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