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Business News/ Industry / Banking/  'Stricter norms a preemptive measure for sustainable lending' says RBI Governor Shaktikanta Das
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'Stricter norms a preemptive measure for sustainable lending' says RBI Governor Shaktikanta Das

Emphasising the nature of these actions as ‘pre-emptive, calibrated, and targeted’, Das highlighted additional macroprudential measures announced recently, all oriented towards ensuring sustainability.

RBI Governor Shaktikanta Das delivers the inaugural address at FIBAC 2023 (PTI Photo/Shashank Parade)Premium
RBI Governor Shaktikanta Das delivers the inaugural address at FIBAC 2023 (PTI Photo/Shashank Parade)

RBI Governor Shaktikanta Das, at the annual FIBAC event today, underscored that the recent stricter norms on unsecured lending were aimed at sustainability. He clarified that while certain sectors like housing and vehicle loans, along with small business credits, were exempted, it was due to their positive impact on economic growth.

Also Read | RBI mulls new penalty framework for banks: Report

Emphasising the nature of these actions as "pre-emptive, calibrated, and targeted", Das highlighted additional macroprudential measures announced recently, all oriented towards ensuring sustainability.

Shaktikanta Das highlights various concerns

While expressing the absence of immediate stress in the banking sector, Das urged lenders to persist with stress testing to fortify the system against unforeseen challenges.

Also Read: RBI joins central bank gold rush, buys 9 tonnes in July-September

Addressing non-banking finance companies (NBFCs), specifically microfinance institutions (MFIs), Das urged the prudent use of rate-setting flexibility provided by the central bank, noting some NBFC-MFIs reporting increased interest margins.

Despite headline inflation indicating a cooling trend, also Das reaffirmed the RBI's unwavering focus on managing price rise concerns.

Also Read | India's Q2 GDP number will surprise everyone: RBI Governor Shaktikanta Das

Noting the Indian rupee's stability amidst elevated US treasury yields and some depreciation, Das highlighted the currency's controlled movements and low volatility.

Advocating for reforms in agricultural marketing and interconnected value chains, Das stressed the necessity for sustained growth, stable prices, and mitigation of price shocks in this sector.

The Indian Banks’ Association (IBA) and the Federation of Indian Chambers of Commerce and Industry (FICCI) have jointly organised the FIBAC event.

India set for strong growth

India is expected to end FY24 with strong growth and macroeconomic stability, although inflation and the impact of external factors on the rupee could pose risks, the finance ministry said in its latest monthly economic review released on November 21.

Also Read | RBI hints at higher interest rates, refrains from giving timeline of reduction: ‘Only time will tell’

In its economic review for October, the ministry said a fuller transmission of the monetary policy may also temper domestic demand, although the review noted India’s growth in FY24 should continue to be a positive outlier compared to other major economies.

At its latest rate-setting bi-monthly meeting in October, the RBI kept the repo rate unchanged for the fourth consecutive time at 6.5 percent.

A higher repo rate makes debt and debt-servicing more expensive, thus slowing down economic activity.

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Published: 22 Nov 2023, 01:44 PM IST
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