India's central bank is closely monitoring some fast-growing personal loan categories for signs of nascent stress, its chief said on Friday.
Banks and non-bank lenders would be "well advised to strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards in their own interest," Shaktikanta Das, governor of the Reserve Bank of India (RBI), said during his monetary policy address in Mumbai.
Robust risk management and stronger underwriting standards by lenders are "the need of the hour," he added.
Indian banks have been expanding their unsecured lending portfolio as the pandemic-induced stress on household finances began easing.
The RBI has been cautioning banks about loans that do not need any collateral amid rising interest rates and high inflation, Reuters reported in April.
Banks' outstanding receipts from credit cards rose to 2.18 trillion rupees ($26.19 billion) as of Aug. 25, from 1.68 trillion rupees a year earlier, central bank data showed.
Outstanding personal loans rose 26% in the same period.
Separately, the RBI on Friday said it has reviewed norms for financing of projects that are under implementation.
Such financing is characterised by various complexities including long gestation periods, it said, adding that a comprehensive regulatory framework applicable for all regulated entities will soon be issued.
($1 = 83.2230 Indian rupees)
