Rising NPAs in FY27: Is Your Loan Account at Risk?

Indian banks are expected to see more bad loans in FY27, especially from personal loans and small business borrowers. If you have an unsecured loan or run a small business, here is what this means for your credit access and EMIs.

Here's what happened: Indian banks are projected to see a rise in fresh non-performing assets in FY27, with unsecured retail loans and MSME credit identified as the two most stressed segments.. Unsecured lending — personal loans and credit cards — grew very rapidly over the past three years, and repayment stress is now surfacing as household budgets remain stretched.. MSME borrowers are under pressure from rising input costs and slower collections, making their loan accounts more vulnerable to slipping into the 90-day NPA bucket..

What you should do: Check your EMI-to-income ratio right now — if EMIs consume more than 40% of your take-home pay, contact your lender about extending tenure or restructuring before you miss a payment.. Pull your free CIBIL report at cibil.com and look for any accounts already marked as 'SMA-1' or 'SMA-2' — these are early stress flags that appear before a full NPA classification.. If you run a small business, avoid drawing down all available credit line capacity — maintaining a buffer shows lenders healthy credit behaviour and protects your eligibility for future loans..

Requesting a loan restructuring before missing an EMI keeps your account 'standard' on bank books — once it crosses 90 days overdue, your CIBIL takes the full NPA hit and restructuring terms worsen sharply.