Reserve Bank of India Governor Shaktikanta Das (file photo)Image Credit source: File Photo : Getty
Between Europe and US banking crisis, the Governor of Reserve Bank of India has warned local banks. Along with this, he has also advised that when good times are going on, preparations should be started for bad times. RBI governor has asked banks to keep an eye on their retail portfolio specially unsecured loans. Which includes personal loan, credit card, small business loan, micro finance loan. Since June 2020, the total share of unsecured loans in private banks has increased by an average of 3 per cent and this has not been good for the central bank.
how much unsecured loan
The CEO of a private bank said that RBI has asked banks to remain within the limit regarding unsecured loans, as FY2023 has seen RBI going over the limit. According to the latest RBI report, unsecured loans disbursed between February 2022 and February 2023 stood at Rs 2.2 lakh crore, which was more than Rs 1.18-lakh crore given to large corporates. The size of the home loan market during this period was Rs 2.49 lakh crore, which was only marginally bigger than the unsecured loan market. A report by Care Ratings pegs the unsecured loan market at Rs 13.2 lakh crore, which is equal to the total exposure of NBFCs (Rs 13.1 lakh crore).
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Unsecured loan increased even after warning
In the year 2019, the risk weight on unsecured loans other than credit cards was reduced from 125 per cent to 100 per cent to bring them at par with other retail loans. Giving information, a private bank senior official said that despite repeated warnings to banks, especially private banks, these unsecured loans are growing faster than secured retail loans. If this trend continues, the regulator may increase the risk weight by a fee.