New Delhi, Aug. 11 -- The Indian banking sector is currently facing a significant uptick in personal loan defaults, most notably in small-ticket loans and rural regions. According to data compiled by the Fintech Association for Consumer Empowerment (FACE), loans overdue for more than 90 days climbed to 3.6% by March 2025. This is the highest in six quarters.

Further, the stress is particularly acute among borrowers under the age of 25 and in tier-3 and rural areas, highlighting the challenges faced by young and new-to-credit consumers as financial obligations intensify.

Private banks saw bad loan ratios edge up in the April-June 2025 quarter, with Kotak Mahindra Bank's NPA rising to 1.48% and similar stress across the sector. Banks are ...