Default Rate Calculator

How to Use the Default Rate Calculator

• Enter the Number of Defaulted Loans. A default is typically defined as 90+ days past due (DPD) in India, aligned with RBI NPA classification.
• Enter the Total Loans in Portfolio. Use the total active loans, not cumulative disbursements.
• Optionally, enter the Total Default Amount and Total Portfolio Value to also see the value-weighted default rate.

Tip: Track default rate by vintage (origination month) to identify whether underwriting quality is improving or deteriorating over time. A portfolio-level rate can mask problems in recent cohorts.

Default Rate Formula

Default Rate (Count) = (Defaulted Loans / Total Loans) x 100

Default Rate (Value) = (Default Amount / Portfolio Value) x 100

Example:

• Defaulted Loans: 50
• Total Portfolio: 2,000 loans
• Default Rate: (50/2000) x 100 = 2.5%
• Default Amount: Rs 50 Lakh
• Portfolio Value: Rs 20 Crore
• Value-Weighted Rate: (50L/2000L) x 100 = 2.5%

Default Rate Benchmarks by Segment

• Home Loans (India): 1-3% (NHB data, 2024)
• Consumer Personal Loans: 3-6% (CIBIL retail data, 2024)
• MSME Loans: 4-8% (varies widely by ticket size and industry)
• Microfinance: 2-5% PAR 30, 1-3% PAR 90 (Sa-Dhan industry data)
• BNPL Products: 3-10% (higher for new-to-credit segments)
• Vehicle Loans: 2-4% (secured, hence lower default)
• Gold Loans: Under 2% (fully secured by gold collateral)
• Credit Cards: 5-8% gross, 2-4% net of recoveries

Sources: RBI Financial Stability Report 2024, CIBIL Retail Credit Trends, Sa-Dhan Microfinance Report.

Vintage Analysis: The Right Way to Track Defaults

Portfolio-level default rate is a lagging indicator. By the time it spikes, the damage is already done. The right approach is vintage analysis:

• Cohort each month/quarter of origination separately
• Track DPD buckets (0-30, 31-60, 61-90, 90+) for each cohort at the same age
• Compare seasoning curves: Is the Jan 2026 cohort performing better or worse than Oct 2025 at the same 3-month mark?
• Look for pattern breaks: If recent cohorts are defaulting faster, your underwriting may have loosened

This is how sophisticated lending fintechs catch problems 3-6 months earlier than companies relying on portfolio-level metrics alone.