Now Reading: HDB Financial sees unsecured lending recovery in UP as overleveraging eases
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HDB Financial sees unsecured lending recovery in UP as overleveraging eases
HDB Financial sees unsecured lending recovery in UP as overleveraging eases
HDB Financial Services (HDBFS) is seeing a recovery in unsecured lending in Uttar Pradesh as borrower-level overleveraging declines. The rejection rate for business and personal loans in the state has fallen to…
HDB Financial Services (HDBFS) is seeing a recovery in unsecured lending in Uttar Pradesh as borrower-level overleveraging declines. The rejection rate for business and personal loans in the state has fallen to around 55%, down from a peak of 70% in January 2026, according to an analyst report by ICICI Securities.
Disbursements in Uttar Pradesh have improved sharply since April 2026, with July reaching monthly peak levels seen in FY25. HDBFS had earlier tightened unsecured loan disbursements in response to rising overleveraging, causing its unsecured portfolio to contract 8% year-on-year at the book level in Q1FY27. The company now expects healthy growth in the segment over the next one to two years in the state.
Uttar Pradesh remains HDBFS's largest state by assets under management, accounting for around 14% of its overall AUM as of June 2026. The company's UP portfolio grew 16% year-on-year in Q1FY27, outpacing the 12% growth of its overall portfolio.
Indian Opinion Analysis
The recovery in HDBFS's unsecured lending mirrors a broader tightening cycle that followed the Reserve Bank of India's November 2023 directive to increase risk weights on unsecured consumer credit, which forced lenders to rein in exposure to overleveraged borrowers. The sharp drop in rejection rates from 70% to 55% suggests that the corrective action, combined with pullback by fintech lenders, is cleaning up borrower balance sheets. With UP contributing 14% of HDBFS's total AUM, the state's performance is a key bellwether for the company's national unsecured book. The key number to watch is whether the rejection rate continues to fall below 50% in the coming quarters, which would signal sustained improvement in borrower health.
The RBI's risk weight hike on unsecured consumer credit in November 2023 forced banks and NBFCs to tighten underwriting, and HDBFS's falling rejection rate in its largest market suggests that the correction is working through the system.
Source: bfsi.economictimes.indiatimes.com
This brief was synthesised by AI from the source linked above.
