RBI's 'timely action' reduced growth of 'unsecured loans': Shaktikanta Das

MUMBAI: Reserve Bank of India Governor, Shaktikanta Das on Thursday said that the timely action and prompt measures has moderated the growth of unsecured loan, adding that failure to do so could have led to a "bigger problem".
Addressing the second edition of the global conference on financial resilience organised by the College of Supervisors (CoS) of the RBI, Das said that the positive impact of timely interventions "resulted in slowing down growth of unsecured loans."
The RBI Governor said, "We thought if left unattended, these vulnerabilities can become a bigger problem.So, we thought it is better to act in advance and slow down the credit growth."
According to Das, "India's domestic financial system is now in a much stronger position than it was before we entered the period of the COVID crisis. It is now in a much stronger position, characterized by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-banking lenders, that is NBFCs."
Das also highlighted that the growth in credit card portfolios has decreased from 30 per cent to 23 per cent following the RBI's action. Similarly, bank lending to Non-bank Finance Companies (NBFC) has slowed down from 29 per cent to 18 per cent.
"I would like to compliment the banks and other financial sector entities for such a stellar performance in the year which has just ended on March 31. There is absolutely no room for complacency because the world is changing, challenges are coming, complexities are growing, and problems can originate from any corner of the financial system within the country, or the world because of something which may be completely unrelated to you and me," he said.
The RBI increased the risk weights on unsecured lending and exposure to NBFCs on November 16, 2022, which will make banks set aside larger amounts of capital on such assets.
The first edition of the global conference was held last year in April.