Amid Rise In Personal Loans, RBI Governor Asks Banks To Be 'Vigilant'

The rise in credit has drawn a significant amount of interest in the banking segment, this credit is driven by personal loans. In 2023, there was a 32 per cent spike in personal loans. There is also a significant amount of exposure to Non-Banking Financial Corporations (NBFCs), that has been observed. In addition, according to estimation engendered early this year, personal loan interest rate likely to rise up to 1.5 per cent.

Governor Das asks Banks to Vigilant

Amidst these developments, RBI governor Shaktikanta Das recently remarked on the happenings, and asked bank CEOs to be 'vigilant' against risk build-up. he said that there is no scope for complacency. A recent report said, that aggregate NPA provisioning has declined, but at the same to record write-offs were also in the news last year.

In the light of these developments, Das emphasized on several critical issues including the viability of business models, disproportionate growth in personal loans, compliance with co-lending guidelines, bank exposure to the NBFC sector, effective management of liquidity risks, readiness in IT and cybersecurity, operational resilience, combating digital fraud, and enhancing the internal rating framework.

Focus on customer redressal

He also stressed on the need to lay emphasis on customer grievance redress mechanism and protection of customers’ interests. Das underscored it as paramount for the safety and stability of the financial system and that of individual financial institutions.

Personal loans amounting to Rs 64,778.27 crores were disbursed. This was more that nay other loan categories including auto loans, education loans, gold loans, and healthcare financing.