New Delhi: Teaser loans should be made as clear as possible instead of banning them, India’s chief economic adviser to the finance ministry, Kaushik Basu said on Wednesday.
Teaser loans are special housing and auto loans that banks were offering to borrowers at lower rates and had come under the central bank’s scanner.
Basu said the microfinance sector should not be regulated too heavily.
The sector has come under much scrutiny after Andhra Pradesh, which was the sector’s largest market, passed a host of stricter laws, hurting operations and profitability of microfinance companies.
Need to live with sector-specific price rise
India may have to live with sector-specific price hike, which will need to be tackled with a different approach, he said.
Price pressures in the economy have again intensified with food inflation accelerating to above the 14% level, while broader inflation, currently at a high 7.48% for November, is also expected to quicken in December.