In recent years, due to easy digital loans and credit facilities, millions of people took loans without much thought. But now, as repayment time has come, many are becoming defaulters. This has directly impacted NBFCs (Non-Banking Financial Companies), leading to a record-high NPA (Non-Performing Assets). As per reports till December, NBFCs have suffered a loss of around ₹50,000 crore.

Loan Crisis and Rising Defaults

A large section of society is getting trapped in loans and debts. When banks reject loan applications, people turn to NBFCs. Microfinance companies are one of the biggest sources of loans. According to data, due to easy digital loans, many people borrowed money without thinking about repayment. But now, many of them are unable to repay, increasing NBFCs’ financial burden.

₹50,000 Crore NPA Surge

By December, the microfinance sector’s NPA had risen to ₹50,000 crore, a record-high level. This accounts for 13% of all issued loans. NPA refers to loans that people are unable to repay. Additionally, many more loans are on the verge of becoming NPAs. The number of such risky loans has increased to 3.2%, compared to just 1% a year ago. This shows that people’s ability to repay loans is weakening.

The NPA estimate is based on data from the credit bureau CRIF High Mark. According to CRIF, as of December 31:

• 3.3% of loans were overdue between 91 to 180 days.
• 9.7% of loans were overdue for more than 180 days.

This means that many borrowers have not paid their EMIs even after 90 days.

Why Are Loan Defaults Increasing?

1. Easy Loan Approval – Many fintech companies and NBFCs provided loans with minimal documentation.
2. Unstable Jobs – After the pandemic, many people still do not have stable income sources.
3. Rising Inflation – Increased daily expenses have made it difficult for people to pay their EMIs on time.
4. Misuse of Digital Loans – Many people took loans without necessity and could not utilize them properly.

Impact on NBFCs

• Rising NPA: More defaulters have put pressure on NBFCs’ financial stability.
• Funding Issues: Many NBFCs are now cautious about giving new loans.
• Recovery Challenges: Companies are trying to recover money through WhatsApp and digital messaging, but success rates are low.

The rising loan default crisis is a serious concern for both financial institutions and borrowers. If not controlled, it could further damage the economy and credit market.