Quick, easy loan is an agent provocateur. Are unsecured loans vaulting to a contagion of defaults?

Illustration by Muhabit ul haq via AI

Synopsis
Banks, non-bank finance companies and fintech-backed digital lenders have all thrown their hat in the ring to get customers on board with quick lending. Most of them brazenly offer personal loans without much insistence on knowing the end use. This has led to a rapid growth in unsecured credit. Is a contagion of defaults on the cards?

Shubham P, a 26-year-old Mumbai-based engineering professional, recently bought an iPhone by opting for a six-month zero-cost EMI on his credit card. He already had two other EMIs related to the purchase of white goods — a television and an air conditioner — from another credit card.His three EMIs accounted for nearly 40% of his monthly salary. He missed one EMI of his iPhone and started getting calls from the bank, prompting him to clear the