Unsecured lending moderates after RBI caution, says Governor Das

MPC decided to keep the repo rate unchanged at 6.5 percent

Lending to unsecured segments like credit cards and personal loans moderated after the Reserve Bank of India (RBI) flagged a rise in risky assets last year, according to RBI Governor Shaktikanta Das.

“Recent data suggest that there is a moderation in loans and advances in unsecured lending after the RBI flagged it last year,” Das said in his monetary policy statement on June 7.

In November 2023, the RBI had increased risk weightings on certain loan categories of unsecured credit by 25 basis points to signal to lenders to slow down the pace of high growth and control stress.

The RBI’s latest sectoral credit data showed the credit card outstandings jumped 23 percent on a year-on-year basis in April 2024, down from 31 percent last year. Growth in the retail loans category stood 17.1 percent in April 2024, compared to 25.7 percent a year ago.

On June 7, the MPC decided to keep the repo rate unchanged at 6.5 percent with a majority of 4:2, the governor said at the second bi-monthly monetary policy review for the current financial year, adding that the central bank has decided to maintain withdrawal of accommodation stance.

"The pattern of world crisis continues, but India is seeing positive growth. But we need to stay vigilant against new challenges," Das said. The RBI sees bright prospects of sustained high growth. It will gear up to be future ready to enhance India's global positioning, he added.