The Reserve Bank of India (RBI) has raised concerns about “very high growth” in unsecured personal loans by banks and non-banking finance companies (NBFCs). The apex bank will not hesitate to tighten risk weights or provisioning norms for such loans if the lenders do not take appropriate internal controls.

RBI governor Shaktikanta Das said in a televised address after a three-day meeting of the monetary policy committee (MPC) that certain components of personal loans were recording very high growth.

“These are being closely monitored by the Reserve Bank for any signs of incipient stress. Banks and NBFCs would be well advised to strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards in their interest. The need of the hour is robust risk management and stronger underwriting standards.’’

Responding to a query at the post-policy meet, Das said that the banking regulator is only sensitising the lenders that they have to be careful. ``You have to keep your eyes and ears open and nose also open, you have to smell where the crisis is likely to come up. At the moment, the banking and NBFC sector are stable.’’

RBI deputy-governor J. Swaminathan said the growth rate of such loans vis-à-vis other categories is an “outlier’’. He pointed out that since the last couple of years while the overall credit growth has been in the range of 12-14 per cent, these loans have seen a rise of 23 per cent which looks to be an outlier.

“As a supervisor, it is our intention to inform the banks that this is an outlier level of growth, so strengthen your internal surveillance mechanisms so that any risk that is building up is handled upfront rather than coming to grief at a later time,’’ he said.

He said a spurt in digital channels aided loan growth.