RBI on Personal Loan: There is no danger from personal loan, RBI's strictness is only to control

RBI on Personal Loan: There is no danger from personal loan, RBI's strictness is only to control

RBI on Personal Loan:For some time, RBI was worried about the increasing amount of personal loans. After this, it decided to curb such loans by taking some strict steps. Due to this, companies which are rapidly expanding personal loan business are in trouble. Now the Central Bank of India has clarified that it does not want to stop the credit card and personal loan business by tightening the rules but wants to stop its excessive use. At present its quantity is very less in the total loan. There is no danger from this right now. 

Risk weight was increased on November 16 

RBI had increased the risk weight on unsecured loans on November 16. Central Bank Deputy Governor M Rajeshwar Rao said that it is necessary to reduce the excessive amount of credit cards and personal loans. We are doing risk management. RBI wants that balance should be maintained in matters of lending. Rao said that we have not tried to stop personal or credit card loans. Just keep its reins tight. NBFCs were moving ahead in the matter of personal loans. This risky loan could have led to a crisis in the future. 

Can't wait for the house to catch on fire

Earlier, RBI Governor Shaktikanta Das had said that we cannot wait for the house to catch fire. We have to stop the fire from starting. He had said that many banks and NBFCs were distributing personal and credit card loans in excess of the requirement. We had warned them earlier also. Being a regulator, it is our responsibility to maintain the balance. 

Banks and NBFCs became alert 

Paytm had recently announced to reduce the distribution of small loans below Rs 50 thousand. Apart from this, all banks and NBFCs have appealed to their fintech partners to distribute at least personal loans. RBI has confirmed that at present the share of loans smaller than Rs 50 thousand is only 0.5 percent of the total loans.

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