What measures should consumers take in light of RBI's order on unsecured loans?

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Reserve Bank of India (RBI) has recently increased the risk weights on unsecured consumer loans like credit cards by 25 percent for both banks and Non-Banking Financial Companies (NBFCs). Unsecured loans are those that are not backed by any collateral, such as personal loans or credit card debt. The RBI's order requires the lenders to put in place additional security measures to protect consumers from fraud and identity theft.

In light of this, consumers should ensure they have a thorough understanding of the terms and conditions of any unsecured loan they consider taking. They should also regularly monitor their credit reports and bank statements for any suspicious activity. Rohit Arora, CEO and Co-Founder, Biz2Credit says, “Consumers should exercise increased financial prudence by thoroughly evaluating their credit needs and repayment capacity.

It's also advisable to explore diverse credit options and ensure a strong credit history to mitigate the impact of higher borrowing costs." Borrowers should also be cautious of sharing their personal and financial information online or with unfamiliar lenders. By being proactive and taking these measures, they can safeguard themselves and avoid falling victim to fraudulent activities related to unsecured loans. Ajay Chaurasia, Vice President, RupeeRedee says, “Consumers should anticipate a potential rise in loan charges specifically concerning unsecured lending.