3 Reasons Why RBI Wants Banks To Cut Down On Personal Loans

3 Reasons Why RBI Wants Banks To Cut Down On Personal Loans

Sakshi Batra
Sakshi Batra
  • New Delhi ,
  • Jan 3, 2024,
  • Updated Jan 3, 2024, 6:50 PM IST

 

The RBI has raised concerns about an uptick in activities like cryptocurrency trading, equity derivatives, and online gaming, prompting an investigation into the use of unsecured loans for these purposes. The central bank has noted a sharp increase in unsecured loans, especially those under ₹50,000, posing a potential risk of turning into non-performing assets (NPAs). In response, the RBI directed banks to increase the risk weightage for unsecured loans. The Financial Stability Report highlighted a surge in equity derivatives trading, driven by individual investors, leading to a significant increase in active derivatives traders. Axis Mutual Fund's report, 'Gamification of Indian Equities,' underscores the imbalance between the derivative and cash markets, signaling an unhealthy market development. The cryptocurrency market saw a 160% surge in trading, and the online gaming sector is valued at ₹16,428 crore in 2023. These trends are identified as key factors prompting the RBI's recent regulatory actions

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