The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday (June 7) emphasised the central bank’s commitment to closely monitor data regarding unsecured lending and determine if further regulatory measures are necessary.
While making announcements at the second bi-monthly monetary policy review for the current financial year, Das said that Gross Non-Performing Assets (GNPA) of Non-Banking Financial Companies (NBFCs) and Scheduled Commercial Banks are below 3% as of March 2024.
He expressed concern over certain lending practices observed among regulated entities.
He highlighted that some fees charged by a few Regulated Entities (REs) are not disclosed in the Key Fact Statement (KFS), contravening established guidelines.
Additionally, the RBI has noted that some NBFCs and Microfinance Institutions (MFIs) are imposing high and usurious interest rates on borrowers.
The RBI Governor assured that the central bank is engaging with individual banks, NBFCs, and MFIs to encourage corrective measures.
It must be noted that unsecured loan growth had slowed to about 18% in April, from 23% in November 2023.
In November 2023, the RBI had increased risk weightings on certain loan categories of unsecured credit by 25 basis points to signal to lenders to slow down the pace of high growth and control stress.
On June 7, the MPC decided to keep the repo rate unchanged at 6.5% with a majority of 4:2.
The governor said , adding that the central bank has decided to maintain withdrawal of accommodation stance.
Catch all RBI policy-related updates here
While making announcements at the second bi-monthly monetary policy review for the current financial year, Das said that Gross Non-Performing Assets (GNPA) of Non-Banking Financial Companies (NBFCs) and Scheduled Commercial Banks are below 3% as of March 2024.
He expressed concern over certain lending practices observed among regulated entities.
He highlighted that some fees charged by a few Regulated Entities (REs) are not disclosed in the Key Fact Statement (KFS), contravening established guidelines.
Additionally, the RBI has noted that some NBFCs and Microfinance Institutions (MFIs) are imposing high and usurious interest rates on borrowers.
“We have observed that the guidelines on the Key Fact Statement are followed by only a few regulated entities, yet some continue to charge undisclosed fees. Moreover, the interest rates charged by some NBFCs and MFIs are excessively high,” Das stated.
The RBI Governor assured that the central bank is engaging with individual banks, NBFCs, and MFIs to encourage corrective measures.
It must be noted that unsecured loan growth had slowed to about 18% in April, from 23% in November 2023.
In November 2023, the RBI had increased risk weightings on certain loan categories of unsecured credit by 25 basis points to signal to lenders to slow down the pace of high growth and control stress.
On June 7, the MPC decided to keep the repo rate unchanged at 6.5% with a majority of 4:2.
The governor said , adding that the central bank has decided to maintain withdrawal of accommodation stance.
Catch all RBI policy-related updates here
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