Financial Sector: Unbridled Credit Growth Harmful For Fin Sector: Rbi | Mumbai News

Apr2,2024



Mumbai: reserve Bank of India Will monitor to reduce uncontrolled risks credit enhancement Deputy Governor M Rajeswara Rao has said this could be detrimental to the health of the financial entity and could give rise to systemic concerns if widespread.
Rao said that as a regulator, the RBI's endeavor has always been to promote a strong and flexible financial intermediation system with an appropriate regulatory and supervisory framework. He said that there is huge potential for technological development and innovations. financial sector Because they have immense potential to increase the reach of financial firms, enhance the range of product offerings and facilities to customers and expand the scope of finance to hitherto excluded areas.
“At the same time, we need to be alert to the possibilities that new entrants financial Services The space, including fintech firms, can significantly change the universe of financial service providers, the deputy governor said while addressing an event last week.
He said that this could affect the market concentration and level of competition and create new challenges. In his speech he touched upon various aspects of the rules.
On the risks posed by pro-cyclical lending, Rao said unbridled credit growth and any laxity in credit discipline or underwriting standards could be detrimental to the health of the financial entity concerned and, if widespread, could give rise to systemic concerns. Could.
“From this perspective, in recent times, the consumer credit segment, especially towards the unsecured portfolio, has seen considerable offtake of loans. Moreover, the increasing dependence of NBFCs on bank lending was giving rise to regulatory concerns,” he said.
Although asset quality at the broader portfolio level was not displaying any major signs of stress, regulatory intervention was required due to the persistently high credit growth reported in the above segments. agencies

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