RBI Monetary Policy: RBI Concerned About 'Very High Growth' In Unsecured Personal Loans
The regulator has advised banks and NBFCs to strengthen their internal surveillance mechanisms and address risk buildup.
The Reserve Bank of India raised some concerns about "very high growth" in unsecured personal loans by banks and non-banking financial companies.
Certain components of personal loans are recording very high growth, and the RBI has been closely monitoring these for any signs of incipient stress, Governor Shaktikanta Das said in his monetary policy statement on Friday.
Accordingly, the regulator has advised banks and NBFCs to strengthen their internal surveillance mechanisms and address the buildup of risks, if any.
It has also asked these lenders to institute suitable safeguards for their well-being.
RBI data shows that bank credit deployment to the personal loans segment has been rising. The total credit to the segment rose 30.7% year-on-year to Rs 47.70 lakh crore in August.
Elaborating on financial stability, RBI Governor Das said in his speech that the Indian banking system continues to be resilient. It is backed by improved asset quality, stable credit growth, and robust earnings growth.
As per June 2023 data, even the financial indicators of NBFCs continue to be in line with those of the banking system, the governor added in his speech.
Even in April 2023, the central bank raised concerns over banks' unsecured loan portfolios.
While the global financial landscape is rapidly changing with the possibility of "potential stress" from "unanticipated corners", the central bank continues to monitor the situation in order to maintain the financial stability, the governor said.
India's Monetary Policy Committee on Friday kept the benchmark repo rate unchanged at 6.50% for the fourth straight meeting.
