RBL Bank, Aditya Birla Capital, SBI Cards rally up to 5% as RBI sees easing stress in unsecured loans

Shares of RBL Bank, Aditya Birla Capital, and SBI Cards and Payments Services came under investor radar during Friday’s trading session, June 6, gaining up to 5% after Reserve Bank of India (RBI) Governor Sanjay Malhotra, in the second bi-monthly monetary policy meeting for the financial year 2025-26 (FY26), noted that the stress previously observed in unsecured loans and credit card portfolios has ‘abated.’ However, he cautioned that microfinance institutions (MFIs) continue to face pressure.

“The stress witnessed earlier in retail segments like unsecured personal loans and credit card receivables portfolios has abated, while the stress in the microfinance segment is persisting. Banks and NBFCs active in these segments are already recalibrating their business models, strengthening their credit underwriting practices, and stepping up their collection efforts to avoid any excessive build-up of risks on this front in the future,” Malhotra said.

The pace of bank retail lending in India declined sharply to 11.6% year-on-year (YoY) in 2024-25 (FY25) from 27.6% in FY24, as lenders scaled down disbursements of unsecured loans due to regulatory concerns, such as higher risk weights attached to unsecured lending, and the impact of a high base effect.

Meanwhile, credit rating agency Moody’s recently projected that the quality of unsecured retail loans will remain weaker than that of secured loans for at least the next few quarters. Unsecured personal loans and credit card borrowing grew at a CAGR of 22% and 25%, respectively, in the three years to FY24.

RBI slashes repo rate for 3rd time in a row

As widely expected, the RBI slashed the repo rate for the third consecutive time but surprised the Street by announcing a 50-basis point cut. With a total reduction of 100 basis points over the last three meetings, the RBI has brought the repo rate—the rate at which it lends to commercial banks—down to 5.5% from 6.5%.

The decline in consumer prices in recent months, which hit a six-year low in April, has given the central bank the confidence to proceed with this bumper rate cut. In addition, the RBI has also cut its Cash Reserve Ratio (CRR) by 100 basis points.

The cut in CRR will release up to ₹2.5 lakh crore liquidity in the system and reduce the cost of funding for banks, RBI Governor Sanjay Malhotra said in his address.

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