Mumbai: Governor of Reserve Bank of India (RBI) Shaktikanta Das The central bank on Wednesday warned the country’s lenders against “all forms of exuberance”, days after it tightened rules for consumer loans.
While credit growth is accelerating, banks and non-bank finance companies (NBFC) There is a need to ensure that lending to individual categories is “sustainable”, Das said at an event in Mumbai.
“All forms of over-enthusiasm should be avoided.”
Last week, the Reserve Bank of India (RBI) had asked banks to set aside more capital for lending through personal loans and NBFCs, amid concerns that rising demand for small-ticket consumer loans could increase risks. .
The tightening of lending norms is expected to increase borrowing costs and decelerate consumer credit growth, which has been growing at about twice the pace of overall bank credit.
“These measures are pre-emptive in nature; they are calibrated and targeted,” Das said on Wednesday.
Das also asked lenders to keep an eye on the build-up of stress due to the new lending model.
“Banks and NBFCs need to be careful about relying solely on pre-determined algorithms to take lending decisions,” he said.
The RBI did not tighten capital norms for home loans, vehicle loans and gold loans last week.
The governor said on Wednesday that the central bank does not currently see signs of stress in housing or auto loans.
However, he flagged the risks arising from inter-linkages between banks and NBFCs, and called on non-bank lenders to broaden their sources of funding.
The governor also said so-called micro-lenders, some of which have higher interest margins, should consider whether loans are affordable for low-income consumers.
“Although interest rates are regulated, some microfinance institutions (MFIs) are enjoying relatively high net interest margins,” Das said.
“MFIs should ensure that the flexibilities provided to them in setting interest rates are used judiciously.”
While credit growth is accelerating, banks and non-bank finance companies (NBFC) There is a need to ensure that lending to individual categories is “sustainable”, Das said at an event in Mumbai.
“All forms of over-enthusiasm should be avoided.”
Last week, the Reserve Bank of India (RBI) had asked banks to set aside more capital for lending through personal loans and NBFCs, amid concerns that rising demand for small-ticket consumer loans could increase risks. .
The tightening of lending norms is expected to increase borrowing costs and decelerate consumer credit growth, which has been growing at about twice the pace of overall bank credit.
“These measures are pre-emptive in nature; they are calibrated and targeted,” Das said on Wednesday.
Das also asked lenders to keep an eye on the build-up of stress due to the new lending model.
“Banks and NBFCs need to be careful about relying solely on pre-determined algorithms to take lending decisions,” he said.
The RBI did not tighten capital norms for home loans, vehicle loans and gold loans last week.
The governor said on Wednesday that the central bank does not currently see signs of stress in housing or auto loans.
However, he flagged the risks arising from inter-linkages between banks and NBFCs, and called on non-bank lenders to broaden their sources of funding.
The governor also said so-called micro-lenders, some of which have higher interest margins, should consider whether loans are affordable for low-income consumers.
“Although interest rates are regulated, some microfinance institutions (MFIs) are enjoying relatively high net interest margins,” Das said.
“MFIs should ensure that the flexibilities provided to them in setting interest rates are used judiciously.”
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