RBI governor cautions against gold, home loan top-ups – Times of India

MUMBAI: RBI governor Shaktikanta Das has cautioned lenders against aggressively growing personal loans by offering top-ups on existing home and gold loans. The governor said that some entities are not adhering to regulatory limits on some loans which risked being used for speculative purposes.
Das warned that the banking system could hit by structural liquidity issues if bank deposits continue to trail loan growth.“Alternative investment avenues are becoming more attractive to retail customers and banks are facing challenges on the funding front with bank deposits trailing loan growth. As a result, banks are taking greater recourse to short-term non-retail deposits and other instruments of liability to meet the incremental credit demand,” said Das.

The governor said that “banks must focus on mobilisation of household financial savings trough innovative products and service offerings by leveraging their branch network”.
Das’s comments on personal loans and concerns on credit growth outstripping deposit comes at a time when personal loans have emerged the fastest growing segment, rising 25% year-on- year to 54.8 lakh crore as of June-end. Within this, housing is growing at 36% (18.2% excluding HDFC merger impact). Unsecured personal loans grew 15% year-on-year as of end June 2024. Das cautioned banks against high growth in certain segments of personal loans particularly those used for consumption purposes. He called upon lenders to assess and calibrate their underwriting standards as well as post-sanction monitoring of loans.