Shaktikanta Das: At the moment, the Indian banking sector remains resilient and robust, even if you look at the unsecured consumer loans and some segments of personal loans. The numbers that we have before us are not particularly alarming.
The numbers are within reasonable limits, and even the NPA numbers are also within reasonable limits, they have not severely, steeply, or significantly gone up. But, what came to our notice were two or three points.
One, as I mentioned in my address, there was a kind of exuberance, which we clearly saw was building up, and a kind of a fear of missing out on what they call a FOMO approach, also getting in almost everybody, as this was one opportunity, which everybody thought they will capitalise. Now, in the process, what was happening is that every institution, whether it's a bank or an NBFC, has a certain management bandwidth, to appraise proposals, to diligently examine a loan application, some of them have model-based lending, and there are models which automatically generate sanction letters, we saw that banks and certain NBFCs did not as per our supervisory assessment, have that kind of bandwidth of doing the due diligence of the loan proposals to justify the kind of loan growth in these sectors that was seen.
And it was very clear that this kind of growth would not be sustainable going forward if it is not slightly moderated. So we clearly saw and anticipated some problems ahead of us, down the road.
So, therefore, we call it that we acted preemptively. The approach is that as I said in the last monetary policy, we do not wait for the house to catch fire and then act, we would like to see where the fire is likely to be or is, and act in time so that there is no fire in the house.
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