Loan stress resurfaces! Banks facing potential rising credit costs in FY26; private banks more exposed than PSBs: Report

CareEdge Ratings anticipates a potential rise in banks' credit costs in FY26 due to emerging pressures in unsecured lending and microfinance. Despite this, strong provision coverage ratios, particularly among PSBs, offer a buffer against losses. While credit costs have declined recently, this trend may reverse with increasing stress in personal loans, potentially leading to a slight deterioration in asset quality.

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