RBI's Concern Over Unsecured Lending

The Reserve Bank of India (RBI) has recently voiced its concerns regarding the high ceilings set by banks and finance companies for unsecured loans. It emphasizes the need for prudence among the boards of these institutions to safeguard financial health and systemic stability.

Moderation in Unsecured Lending

Following RBI's tightened norms, there has been a noticeable moderation in unsecured lending. However, the RBI points out that some entities have set very high ceilings, which necessitates continuous monitoring.

Risks Associated with Top-Up Loans on Gold Loans

RBI also highlights the potential risks associated with top-up loans on gold loans, similar to those of unsecured loans. These risks could escalate, especially during volatile times or cyclical downturns of the collateral.

Private Credit: A New Area of Concern

The shift from formal lenders to private credit has caught RBI's attention. It calls for a closer examination of the interlinkages between regulated entities and private credit firms to prevent systemic concerns and regulatory arbitrage.