Banks in the country are urging individual borrowers to secure their loans by purchasing insurance policies amid growing concerns that non-performing assets (NPAs) are likely to increase in the country.

The country's banks have enjoyed lower levels of NPAs. However, there are growing concerns that many borrowers might be unable to replay loans in the coming months. According to banking officials, both public and private sector banks are convincing their customers to buy policies to cover their personal loans and overdraft facilities.

According to the latest data from the to Reserve Bank of India (RBI), outstanding personal loans amounted to Rs 12,817 crore at the end of December 2011. this figure is exclusive of housing, consumer durables, credit cards.

According to insurance industry estimates, about 30 per cent of personal loan borrowers are purchasing covers for their loans. The covers penetration is increasing at a fast pace in the country, as more people are doubtful of their ability replay loans on time to the banks.

Experts say that premium for these policies is low and if customers purchase a group insurance policy that they get a policy with an even lower premium as the loans are usually for a period of three-five years.