Assessing need for more measures to slow unsecured lending: RBI Guv Das

India's central bank is assessing whether further measures are needed to slow down the growth in banks' lending towards unsecured loans and non-banking finance companies (NBFC), Governor Shaktikanta Das said on Friday.
 

The Reserve Bank of India has warned lenders against "all forms of exuberance" due to worries about the rising risks to the financial system and had, in November, asked banks to set aside more capital to cover personal loans and lending via NBFCs.
 

"Recent data suggests that there is some moderation in these loans and advances," Das said, while announcing the interest rate decision.
 

"We are closely monitoring the incoming data to ascertain if further measures are necessary."
 

 

Personal loans issued by banks grew 19.2 per cent on-year as of April 19, less than the 25.7 per cent increase a year ago, the latest RBI data showed. The loan growth to NBFCs halved to 14.6 per cent in the same period.

Das also urged the boards and top management of regulated entities to ensure that risk limits and exposures for each line of business are kept "well within their respective risk appetite framework."
 

The persisting gap between credit and deposit growth rates "warrants a rethink" by the banks' boards to re-strategise their business plans, Das said.
 

Banks need to maintain a prudent balance between assets and liabilities, he said.
 

The "regulatory freedom" enjoyed by lenders in respect of interest rates and charges should be used "judiciously" to ensure fair and transparent pricing of products and services to customers, Das added.

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