RBI governor raises red flag on model-based lending

Shaktikanta Das was the keynote speaker at the Mint BFSI Summit and Awards 2024

- Vaagesh Chakravarthy

The Reserve Bank of India is closely examining the risks that can emerge from model-based algorithm lending, which led to the surge in unsecured loans, according to RBI governor Shaktikanta Das. He also spoke on several other issues. Edited excerpts:

On unsecured loans

At the moment, the Indian banking sector remains resilient and robust. Even if you look at the unsecured consumer loans and some segments of personal loans, the numbers that we have before us are not particularly alarming. Even the NPA numbers are also within reasonable limits. But what came to our notice were two or three points. One, as I mentioned in my address, there was a kind of exuberance which we saw that was building up and kind of a fear of missing out (FOMO). This was one opportunity which everybody thought they would capitalise on.