Banks and credit firms to launch responsible borrowing campaign to curb bad loans

Banks and credit information companies plan to launch a 'Responsible Borrowing Campaign' to promote prudent borrowing as lenders seek to curb bad loans in unsecured credit and the government pushes youth awareness on financial discipline.

According to the latest Reserve Bank of India (RBI) Financial Stability Report (FSR), borrowers in the ₹5-10-lakh annual income segment drove the largest rise in fresh non-performing assets (NPAs) in nine straight quarters from the third quarter of 2023-24 to the third quarter of 2025-26.

Also read: Bank credit, deposits decline in fortnight ended August 15: RBI data

Govt wants youth awareness on fin discipline

"We are in discussion with all stakeholders, including private banks, and the focus will be on maintaining financial discipline, besides how to improve credit history and other related aspects such as timely payments and knowledge of other financial instruments," a banking executive said.

"We will also bring in awareness about cybersecurity and predatory loan apps besides focusing on bank offerings like fixed and recurring deposits," the person said. This is being pursued as the young generation is heavily relying on fintech companies for their credit needs, the executive added.

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The campaign is also expected to address risks from the rapid growth of digital credit. Fintech companies' share of small-ticket personal loans of up to ₹50,000 rose to 56.8% as of March 2026, while delinquencies also increased to 6.4% from 4.1% in March 2024, according to the central bank's FSR released in June 2026.

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Earlier this month, finance minister Nirmala Sitharaman had asked banks to sensitise youth about the importance of maintaining good credit scores and history for responsible credit discipline. She proposed a web- and mobile-friendly portal dedicated to banking awareness for youth.

Speaking at the closing session of the two-day PSB Conclave, Sitharaman had also asked public sector banks to consider launching a focused, month-long 'Banking for Youth' campaign starting October 2, with particular outreach to young citizens aged 16 and above.

The larger objective of the campaign should be to build a long-term banking relationship from campus to career and beyond, rather than a one-time account-opening engagement, she had said.

The RBI in its report observed that overall, banks have reoriented personal loan growth toward borrowers with stronger income profiles and better credit quality, and that asset quality has improved broadly, reflected in lower fresh NPA formation across income and risk categories.