Key Points
MUMBAI: India's central bank is stepping up its fight against "exuberance" in retail lending, targeting new areas including mortgage-linked "top-up" loans, on concern about rising risks to the financial system, a dozen sources said...
The Reserve Bank of India (RBI) is tightening its supervision of the industry and nudging individual lenders to rein in credit in areas where it sees increased risks, although it has not taken any formal enforcement action, the sources with direct knowledge of the process told Reuters...
The RBI has taken a string of measures over the past six months to rein in some retail lending by banks and non-bank financial firms, and publicly warned them against "all forms of exuberance"...
Fintech and banking sources say the RBI has asked banks to conduct rigorous audits on algorithm-based lending models, which use indicators from cash-flows to home address to generate nearly instantaneous approvals for personal loans...
The RBI has urged some shadow banks and small finance banks to limit to 20% the growth of loans made through co-lending agreements, which allow banks to jointly lend to individuals to spread the credit risk, another source said.. Unsecured personal loans were up 21% at the end of January from a year earlier, central bank data shows..
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