Business News : RBI: Scrutiny increased on top-up home loans along with retail loans

Considering the risks, RBI has further increased the scrutiny of retail loans. Besides, top-up home loans have also been taken under scrutiny. According to sources related to the matter, the rapid increase in retail loans may increase risks in the financial system. To prevent this, the investigation has been expanded further.

The Reserve Bank of India (RBI) has increased monitoring of such loans by banks and NBFCs. Institutions providing personal loans have been asked to curb such loans where the risk is increasing. The RBI has taken several steps in six months to rein in some retail lending by banks and non-bank financial firms. In this he has also been warned.

According to sources, RBI’s stance has now changed. He had said in September that there was no risk to the financial system from excessive borrowing. But now the new investigation is a major blow to financial firms. The RBI is now examining four stages of supervision, a source said. This includes monitoring, warning, punishing and then taking action. RBI wants to give institutions an opportunity to take steps in the right direction based on specific warnings. But can also take action if needed.

Increase in loans despite increase in interest rates
Despite RBI increasing the repo rate by 2.5 percent in the last two years, bank loans are increasing by 16% on an annual basis. Whereas this is more than double the estimated 7.6% growth of GDP in the current financial year. Unsecured personal loans were up 21% at the end of January compared with a year earlier.

Banks are advertising wrongly
RBI is now closely monitoring mortgage top-ups. Mortgage loans are basically for repairs or additions to the home. But banks are advertising it to them for weddings, holidays and business investments.