RBI Governor: Top-up Housing Loans Not System-Wide Issue
By Rediff Money Desk, Mumbai Aug 08, 2024 13:33
RBI Governor Shaktikanta Das says surge in top-up housing loans is not a system-wide issue but confined to few entities, urging banks to adhere to regulatory prescriptions.

Photograph: ANI Photo
Mumbai, Aug 8 (PTI) Reserve Bank Governor Shaktikanta Das on Thursday said surge in top-up housing loans is not a system-wide issue but confined to few entities.
Briefing media after the announcement of bi-monthly monetary policy review, Das said, "regulatory requirements in top-up housing loans are not being followed by certain entities and it is not a system-level problem."
Such cases are being dealt at the supervisory level bilaterally, he said.
Banks and NBFCs have also been offering top-ups on other collateralised loans like gold loans.
"Such practices may lead to loaned funds being deployed in unproductive segments or for speculative purposes. Banks and NBFCs would, therefore, be well-advised to review such practices and take remedial action," he said.
Therefore, he said, banks should adhere to regulatory prescriptions relating to loan-to-value (LTV) ratio, risk weights and monitoring of end use of funds with regard to top-ups.
Das further said that the divergence between loan and deposit growth may create asset liability mismatch or liquidity management issue.
It may potentially expose the banking system to structural liquidity issues, he said.
He urged banks to mobilise deposits through innovative products and services by leveraging their vast branch network.
On inflation, Das said, it is moderating but the pace of disinflation is uneven and slow.
Pinning hopes on monsoon, which is 7 per cent higher than long-term average so far, the Governor said, it will have a good impact on Kharif output as well as Rabi because of improvement in moisture content in the soil.
Briefing media after the announcement of bi-monthly monetary policy review, Das said, "regulatory requirements in top-up housing loans are not being followed by certain entities and it is not a system-level problem."
Such cases are being dealt at the supervisory level bilaterally, he said.
Banks and NBFCs have also been offering top-ups on other collateralised loans like gold loans.
"Such practices may lead to loaned funds being deployed in unproductive segments or for speculative purposes. Banks and NBFCs would, therefore, be well-advised to review such practices and take remedial action," he said.
Therefore, he said, banks should adhere to regulatory prescriptions relating to loan-to-value (LTV) ratio, risk weights and monitoring of end use of funds with regard to top-ups.
Das further said that the divergence between loan and deposit growth may create asset liability mismatch or liquidity management issue.
It may potentially expose the banking system to structural liquidity issues, he said.
He urged banks to mobilise deposits through innovative products and services by leveraging their vast branch network.
On inflation, Das said, it is moderating but the pace of disinflation is uneven and slow.
Pinning hopes on monsoon, which is 7 per cent higher than long-term average so far, the Governor said, it will have a good impact on Kharif output as well as Rabi because of improvement in moisture content in the soil.
Source: PTI
DISCLAIMER - This article is from a syndicated feed. The original source is responsible for accuracy, views & content ownership. Views expressed may not reflect those of rediff.com India Limited.
You May Like To Read
TODAY'S MOST TRADED COMPANIES
- Company Name
- Price
- Volume
- Vodafone Idea L
- 8.21 ( -5.09)
- 50736618
- AvanceTechnologies
- 0.64 ( -5.88)
- 23261214
- Srestha Finvest
- 0.63 ( -3.08)
- 17968849
- Vakrangee
- 16.71 (+ 4.96)
- 14316214
- G G Engineering
- 1.11 ( -4.31)
- 13184477
MORE NEWS

Dr Agarwal's Health Care Clocks Q4 Profit at Rs...
Dr Agarwal's Health Care Ltd reports consolidated profit after tax of Rs 28.24 crore...

India-US Trade: $500 Billion Target, Trade Pact...
India aims to boost exports to the US with a $500 billion trade target by 2030 and a...

Jharkhand Priority Sector Lending Projected at...
Jharkhand's credit potential for priority sector lending in FY'26 is projected at Rs...