RBI always monitoring the credit growth, will act as and when needed: Gov Shaktikanta Das

The Reserve Bank of India (RBI) Governor Shaktikanta Das acknowledged signs of exuberance and stress in personal loans, especially unsecured loans, on Thursday, January 18. In an exclusive interview with CNBC-TV18 at the World Economic Forum summit in Davos, Das said that the RBI has acted pre-emptively to avert potential stress or exuberance in credit growth.

He stated that when signs of a potential problem becoming widespread emerge, the central bank takes prompt action.

Responding to concerns about lending practices, Das clarified, "We have not stopped any lending. We have only suggested that banks should provide for any further lending in their accounts."

He asserted that the decision was well thought out to prevent a new source of stress for the Indian banking sector.

Das revealed that stress tests indicated banks' capital adequacy at 16.8%, assuring that banks would maintain capital levels even in extreme stress scenarios.

He noted a real improvement in risk management and governance practices at banks.

On the NBFC sector, Das expressed optimism, saying, "NBFCs have definitely rebounded, and the numbers are quite robust."

He acknowledged the crisis of confidence in the NBFC space post-ILFS and highlighted that the RBI's measures have successfully addressed these concerns.

Speaking on the digital lending landscape, Das acknowledged the exponential growth of fintech companies.

He emphasised the need for regulation, stating that the RBI has appointed a panel to build a framework for regulating digital lending and has issued guidelines.

"RBI was not trying to stifle digital lending activity. Guidelines have increased trust and confidence in the practice," Das asserted.

Das stated that efforts are underway to encourage technological innovation, but within well-formed parameters. He mentioned the establishment of a Self-Regulation Organization (SRO) as an intermediary body for the fintech sector.

While discussions are ongoing regarding the ambit and structure of the SRO, Das emphasised the goal is to ensure that the fintech ecosystem grows robustly within a properly regulated environment.