RBI: RBI has warned banks about client personal loans and is under pressure

 RBI: RBI has warned banks about client personal loans and is under pressure

A research has emphasized the necessity to monitor small value personal loans in light of concerns expressed by the Reserve Bank of India (RBI) over problematic loans.

A research has emphasized the necessity to monitor small value personal loans in light of concerns expressed by the Reserve Bank of India (RBI) over problematic loans. According to a TransUnion CIBIL data, modest personal loans of less than Rs 50,000 accounted for one-fourth of all retail loans by volume between January 2022 and June 2023. In the June 2023 quarter, almost 50% of the clients in this group who were applying for new loans already had four loans.

Shaktikanta Das had made a warning

Let us remind you that last month, Reserve Bank of India Governor Shaktikanta Das urged banks to give unsecured loans greater consideration despite pointing out the dangers to the stability of the financial system. As Shaktikanta Das had once said, "Instead of getting into trouble later, strengthen your internal monitoring techniques so that any potential risks may constitute controlled beforehand."

All categories of loan defaults, with the exception of credit cards and personal loans, have improved, per the statistics. Personal loan default rates rose from 0.44% to 0.84% in the previous year. The percentage of credit card defaults has risen from 1.46% to 1.63%. Loan against property default rates, however, have improved. It has decreased to 2.18% from 3.19%.