Team Blitz India
NEW DELHI: Union Finance Minister Nirmala Sitharaman on November 23 supported the Reserve Bank of India’s (RBI’s) move to curb exuberance in lending, saying non-banking financial companies (NBFCs) and small finance banks needed to remain cautious.
Speaking at a Digital Acceleration & Transformation Expo event, she cautioned that NBFCs and small finance banks should not go too far in their enthusiasm.
“The RBI is quite conscious of where the thin line actually lies. Enthusiasm is good but sometimes it becomes a bit too far for people to digest. So as a measure of caution the RBI has also alerted small finance banks and NBFCs to be careful that they don’t go too far, too soon and face any downside risks later,” she said.
Following a surge in unsecured loans, such as personal loans and credit card spent, the RBI on November 16 tightened the norms for unsecured consumer credit, asking banks and NBFCs to assign higher risk weighting.
The RBI increased the risk weighting on unsecured consumer loans and on credit cards by 25 percentage points to 125-150 per cent. This had analysts estimating the capital cost, on banks alone, going up by at least Rs 84,000 crore.
