Chief Economic Adviser backs RBI's move to rein in soaring unsecured personal loans
During a CII event, CEA Nageswaran cautioned against premature triumphalism, highlighting the significant growth rate of 30% in unsecured personal loans.
Chief Economic Adviser (CEA) to the government of India, Anantha Nageswaran, has expressed support for the Reserve Bank of India's (RBIs) decision to impose restrictions on unsecured personal lending.
During a CII event, Nageswaran cautioned against premature triumphalism, highlighting the significant growth rate of 30% in unsecured personal loans.
"Unsecured personal loans were growing at the rate of 30% and RBI increased the risk weights so that banks and non-banking financial companies would moderate the unsecured personal loans. Our optimism should not become the cause for premature triumphalism," Nageswaran said.
The RBI on November 16 had modified loan provisioning norms for banks and non-banking financial companies (NBFCs) to curb the rapid rise in unsecured retail loans. Unsecured loans are those where the borrower does not need to provide any collateral.
The RBI's response included an increase in risk weights to 125% from 100% for certain loans, aiming to moderate the surge in unsecured retail loans by requiring banks and NBFCs to allocate more capital.
Nageswaran also adopted a cautious stance on economic growth, emphasising the challenges ahead before India can establish itself as a global growth engine. Despite the Indian economy's 7.2% growth in the 2022-23 fiscal year, with GDP expanding by 7.8% and 7.6% in the June and September quarters, respectively. The CEA noted that there are still "many mountains to climb" in the pursuit of sustained growth.
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(Edited by : Sangam Singh)
First Published: Dec 8, 2023 8:34 PM IST
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