MUMBAI: Reserve Financial institution of India (RBI) governor Shaktikanta Das on Wednesday cautioned the nation’s lenders in opposition to “all types of exuberance” days after tightening guidelines for shopper loans.
Whereas credit score progress is accelerating, banks and non financial institution finance firms (NBFCs) want to make sure lending to particular person classes is “sustainable”, Das mentioned at an occasion in Mumbai.
“All types of exuberance have to be averted.”
Final week, the Reserve Financial institution of India (RBI) requested banks to put aside extra capital in opposition to private loans and lending through NBFCs on issues that hovering demand for small-ticket shopper credit score might result in a build-up of threat.
The tightening of lending norms is anticipated to push up borrowing prices and dent shopper mortgage progress, which has been rising at almost double the tempo of total financial institution credit score.
“These measures are pre-emptive in nature; they’re calibrated and focused,” Das mentioned on Wednesday.
Das additionally requested lenders to be watchful of a buildup of stress as a consequence of new lending fashions.
“Banks and NBFCs should be cautious in relying solely on pre-set algorithms” for taking lending choices, he mentioned.
The RBI final week didn’t tighten capital norms for residence loans, automobile loans and gold loans.
The central financial institution doesn’t at the moment see indicators of stress in housing or automobile loans, the governor mentioned on Wednesday.
Nevertheless, he flagged dangers that will emerge from the inter-connectedness between banks and NBFCs, and requested non-bank lenders to widen their sources of funding.
The governor additionally mentioned that so-called micro lenders, a few of which have excessive curiosity margins, should contemplate whether or not the loans are reasonably priced for lower-income shoppers.
“Although the rates of interest are regulated, sure microfinance establishments (MFI) look like having fun with comparatively larger web curiosity margins,” Das mentioned.
“MFIs ought to make sure that the pliability offered to them in setting rates of interest is used judiciously.”
Whereas credit score progress is accelerating, banks and non financial institution finance firms (NBFCs) want to make sure lending to particular person classes is “sustainable”, Das mentioned at an occasion in Mumbai.
“All types of exuberance have to be averted.”
Final week, the Reserve Financial institution of India (RBI) requested banks to put aside extra capital in opposition to private loans and lending through NBFCs on issues that hovering demand for small-ticket shopper credit score might result in a build-up of threat.
The tightening of lending norms is anticipated to push up borrowing prices and dent shopper mortgage progress, which has been rising at almost double the tempo of total financial institution credit score.
“These measures are pre-emptive in nature; they’re calibrated and focused,” Das mentioned on Wednesday.
Das additionally requested lenders to be watchful of a buildup of stress as a consequence of new lending fashions.
“Banks and NBFCs should be cautious in relying solely on pre-set algorithms” for taking lending choices, he mentioned.
The RBI final week didn’t tighten capital norms for residence loans, automobile loans and gold loans.
The central financial institution doesn’t at the moment see indicators of stress in housing or automobile loans, the governor mentioned on Wednesday.
Nevertheless, he flagged dangers that will emerge from the inter-connectedness between banks and NBFCs, and requested non-bank lenders to widen their sources of funding.
The governor additionally mentioned that so-called micro lenders, a few of which have excessive curiosity margins, should contemplate whether or not the loans are reasonably priced for lower-income shoppers.
“Although the rates of interest are regulated, sure microfinance establishments (MFI) look like having fun with comparatively larger web curiosity margins,” Das mentioned.
“MFIs ought to make sure that the pliability offered to them in setting rates of interest is used judiciously.”
