MUMBAI, Jan. 23 -- India's banks are cautiously reopening the tap on unsecured lending, as policy rate cuts drive margin pressure and risks stay largely under control. The shift follows a period of restrained growth after a regulatory clampdown in November 2023 forced lenders to rein in fast-growing personal loans and credit cards. The renewed push to grow these portfolios, however, is selective, as lenders focus on premium, low-risk customers. The Reserve Bank of India (RBI) has cut policy rates by a cumulative 125 basis points (bps) since February 2025, including 25 bps in December. Lending rates typically reset faster than deposit costs, putting pressure on bank margins. Unsecured loans, which are not backed by collateral and command higher yields, are increasingly being positioned as a buffer. India Ratings & Research said on 14 January that while deposit repricing is ongoing following the rate cuts, any meaningful improvement in net interest margins (NIMs) is likely to be delayed until the end of FY26 or early FY27, aided by liquidity-easing measures. Banks' NIM moderated to 3.1% in 2024-25 from 3.3% in the previous year, as per the RBI's Report on Trend and Progress of Banking, dated 29 December, which showed that median NIMs remained highest for private banks, followed by foreign banks, while PSU banks exhibited relatively uniform margins with limited cross-bank variation. Against this backdrop, several private and public-sector banks said they now plan to step up growth in their unsecured portfolios "The overall growth is slightly weaker and personal loan is one segment which also gives them a kicker on the yield side. There are many critical products on that side, and banks actually make quite a bit of risk-adjusted profit compared to a normal loan. So, this remains a fairly attractive product," said Prakash Agarwal, partner - Geofin Capital, adding that the higher-yielding nature of unsecured loans is also likely driving banks' interest in the segment. The NIM for banks has been largely steady to slightly better in the December quarter (Q3FY26). HDFC Bank posted an 8-bps sequential improvement to 3.35%, while ICICI Bank's remained unchanged at 4.3%. Lenders have guided that even as the latest 25-bps RBI cut in December 2025 is priced in, margins are likely to remain resilient in the March quarter, supported by a lag in deposit repricing, a rising share of low-cost current account and savings account (CASA) deposits, and more selective lending in higher-yielding segments, Mint reported on 19 January. Banks, however, are keen to stress that this is not a return to the aggressive expansion seen before the RBI tightened rules in late 2023. Growth plans are being recalibrated around tighter underwriting, customer profiling and ticket sizes. Several lenders said during the December-quarter earnings that they are prioritizing salaried and affluent customers, particularly for personal loans and credit cards, to limit the risk of delinquencies while preserving yields....