CIBIL Score & Credit Defaults

CORE CONVERSATION

Credit Card Defaults Are Up, But It's No Crisis Yet: CIBIL’s Bhavesh Jain

In this week’s The Core Report: Weekend Edition, Bhavesh Jain, CEO of CIBIL, clarified that rising credit card delinquencies in India are not a deep crisis—it's partly a "denominator effect" caused by fewer new cards being issued post-pandemic. Overall portfolio quality is stable across most loan categories, he said. Delinquencies in credit cards have only inched up by 30 basis points year-on-year, far from any systemic stress, he added.

“The way (credit card) non-performing assets numbers are calculated is by dividing the number of delinquent accounts by the total number of cards in force. Since the number of new cards issued has recently declined, the delinquency ratio appears higher,” Jain explained.

He further noted that both unsecured (cards, personal loans) and secured loans (home, auto) have seen a slowdown in credit demand and supply. High real estate prices are delaying mortgage decisions among young borrowers, while Gen Z prefers shorter-term, smaller-ticket loans like smartphones and appliances. However, credit penetration is rising fastest in semi-urban and rural areas.

“Consumer loan growth has been strongest in semi-urban and rural locations, particularly among borrowers under 35 years of age. Both banks and non-banking financial companies (NBFCs) are driving this trend across products like consumer durable loans, two-wheeler loans, and agricultural loans…these three categories account for the bulk of new-to-credit borrowers,” added Jain.

Banks are responding to these shifts by tightening risk models slightly, particularly for unsecured lending. Jain said there’s no aggressive pullback yet, but lenders are fine-tuning underwriting standards to reflect new risk patterns emerging across segments.

The bigger challenge, he said, remains credit access for Micro, Small and Medium Enterprises (MSMEs). Of India's estimated 7 crore MSMEs, only 3.6 crore have ever been reported to CIBIL, and just 92 lakh have live loans today. Formalisation and better data sharing, especially for smaller businesses, are critical for deeper financial inclusion, according to Jain.

As for whether artificial intelligence (AI) and machine learning could eventually replace traditional credit models, Jain said that while new technologies are being integrated into risk models, credit bureau data will remain foundational to lending decisions. 

“AI can help augment credit decisioning, but core credit histories, bureau scores, and financial behaviour remain irreplaceable. Credit repayment history will always remain one of the biggest parameters in assessing creditworthiness," Jain said.

CORE NUMBER

Rs 17,425 crore

This is the total net inflow into Indian equities by FPIs during the week ended April 25, according to Business Standard, quoting depository data. The surge follows an Rs 8,500 crore inflow in the preceding holiday-shortened week. Analysts attribute the turnaround to easing global trade tensions, a stable dollar, and expectations of a US Fed rate pause, lifting sentiment for emerging markets like India. However, FPIs have still pulled out Rs 5,678 crore from Indian equities in April so far, with total outflows reaching Rs 1.22 lakh crore since January 2025.

—🇮🇳🇺🇸 India-US Forge Deal’s Details. India wants the US to treat it the same way it treats its allies like the UK and Australia, and grant it access to important technologies like telecom equipment, biotechnology, AI, pharmaceuticals, quantum computing and semiconductors in the India-US bilateral trade deal. A PTI report said that easy access to cutting-edge technologies would help boost India’s innovation capabilities, though the US might not agree with India’s demands, and could bring up concerns about India’s export controls, intellectual property protections and relationship with Russia. 

—🇮🇳🇵🇰 India-Pak Trade Via Third Parties. Each year, Indian goods worth $10 billion reach Pakistan indirectly through Dubai, UAE, Singapore and Colombo, according to a report by the Global Trade Research Initiative (GTRI). Indian firms send goods to these ports, after which they apply a ‘Made in UAE’ label, for instance, and routed to Pakistan. Officially, the two-way trade between India and Pakistan is much less than that – India imported goods worth $0.42 million from Pakistan and exported goods worth $447.65 million from April 2024 to January 2025. 

—📈 States Capex Loans Surge. The outstanding liabilities of Indian states under the Centre’s 50-year, interest-free Special Assistance to States for Capital Investment (SASCI) scheme have crossed Rs 3.5 lakh crore by FY25-end, Mint reported. The scheme, introduced in FY21, was meant to assist states in boosting infrastructure spending amid subdued consumption and weak growth. Uttar Pradesh, Madhya Pradesh, and Bihar are the top beneficiaries. Though disbursements picked up in the second half of FY25 after election delays, analysts say monitoring actual capex deployment will be crucial to ensure the loans translate into tangible economic growth.

—☀️ Reliance Branches Into Solar Manufacturing. Reliance Industries Limited (RIL) said that it has commissioned its first solar panel manufacturing plant and is also ‘on track’ to build battery storage facilities, according to the conglomerate’s FY25 earnings presentation. The firm said it plans to build a plant with a 10 gigawatt capacity, but didn’t provide exact dates for when it would finish building it. In March, the Ministry of Heavy Industries fined Reliance for failing to achieve the first milestone for a programme for which the government had granted it production-linked incentives. The liquidated damages or penalty computed till March 3, 2025, was Rs 3.1 crore.

PODCAST

On Episode 567 of The Core Report, financial journalist Govindraj Ethiraj talks to Arvind Chari, CIO at Q India UK as well as Sachin Gupta, Chief Ratings Officer of CARE Ratings.

• Markets run on positive undertone but grapple with uncertainty

• India’s forex reserves are rising

• Apple gears to move a big chunk of manufacturing from China to India

• India Inc’s balance sheets and credit profiles are in good health 

• Amazon sellers are raising prices in the US

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas