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Experts, however, say that healthcare loans serve a different purpose and require a nuanced regulatory approach.
Fitch’s latest report highlights growing risks in the unsecured lending segment.
RBI data shows that stressed microfinance assets—loans overdue by 31 to 180 days—rose from 2.15% in March 2024 to 4.3% in September 2024.
In response, RBI increased risk weights on unsecured loans, making borrowing costlier for lenders. This cost is ultimately passed on to consumers and merchants.
Despite these challenges, Fitch projects that Indian banks’ impaired loan ratio will improve, dropping by 40 basis points to 2.4% by March 2025.
Sahil Lakshmanan, Chief Business Officer at CarePal Money, emphasised the need to distinguish medical loans from other unsecured credit.
“Unlike personal loans, medical loans are end-use-based, with funds disbursed directly to hospitals—eliminating misuse,” he said.
Lakshmanan noted that emergency healthcare often doesn’t allow time for collateral-backed loans.
“A nuanced regulatory approach is needed to support responsible medical financing while addressing risks in the broader unsecured lending market,” he added.
As lenders shift focus toward secured loans, industry players say that RBI’s policies should consider the essential nature of healthcare financing.
Balancing credit risk management with access to medical loans remains a key challenge.
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First Published: Feb 23, 2025 5:09 PM IST
