MPC flags unsecured loan risks, urges look at weights, LTV ratios
risk weights, amid rising fears of a wave of defaults.
The RBI recently raised red flags and warned lenders that it might have to step in if banks do not step up monitoring of unsecured loans.
In the recent MPC meeting, member Ashima Goyal said a sudden rise in Indian household debt could be a concern, as per the minutes of the meeting released on Friday. «Prudential tightening, such as raising LTV ratios or risk weights, would be preferable to raising policy rates… After the firm lending-based NPAs, most banks are trying to increase retail loans.
These are secured or based on cash or salary flows. But it will help make sure lending continues to be risk-based and internal assessments are robust,» Goyal said.
Her comment concurs with Governor Shaktikanta Das' post-policy statements, asking lenders to be mindful of the high credit growth in retail which could pose a future risk.
But bankers insist that there is no extra RBI scrutiny on these loans and that the delinquencies are well within limits.
«More than 85% of our loans are to salaried customers who have stable jobs in MNCs, PSUs or large corporates.
Our current trends in delinquencies are all under-identified risk levels according to our own and Cibil's credit scores. What we are seeing is the risk building in the ₹50,000 and below ticket size where the bank does not have any meaningful exposure,» said Sandeep Batra, executive director at ICICI Bank, in a post-results call on Saturday.
Unsecured loans make up just 13.3% of ICICI's loan book but personal loans and credit cards are one of the fastest growing segments for the bank with year-on-year growth of 40% and 30%, respectively.
For the banking system as a whole, unsecured loans constitute less than 10% of
