The next time you swipe your credit card to pay your bills in a retail outlet, make sure you pay back the money to the bank, as not doing so would increase the count of non-performing asset (NPA) for the bank.
According to a recent study by Credit Rating Information Services of India (CRISIL), the premier credit ratings organisation, the gross non-performing assets in retail loans may rise to four per cent by March 2009, from 2.7 per cent in 2007.
The retail loans segment that includes housing advances, vehicle loans, personal loans and credit cards, has been experiencing growth momentum from 2004.
However, according to the ratings company, the situation will remain manageable as secured loans such as mortgage and vehicle loans comprise nearly 80 per cent of retail loan portfolio.
Citing reasons, CRISIL said that the increasing exposure to high-risk customers is mainly through personal loans and credit card receivables. These are unsecured and accounted for 17 per cent of the total outstanding retail loans in March 2007, up from 6 per cent in 2004.
Housing loans constitute over half of the total retail loans in India and is expected to increase to 2.7 per cent in financial year 2008-09.