A strategic shift is imperative. In 2024, Indian banks will stand at a pivotal juncture
FinTech BizNews Service
Mumbai, December 22, 2023: As we stand on the cusp of 2023, the RBI's decision stands as a beacon of prudence and foresight. Jaya Vaidhyanathan, CEO, BCT Digital, shares interesting views around banking sector and unsecured loans.
Jaya Vaidhyanathan, believes: “Elevating risk weights for personal loans underscores our commitment to responsible lending and financial stability. It's a timely intervention, echoing caution against the allure of easy credit in the unsecured consumer loans sphere. While the monetary impact of potential bad loans might seem limited, the sheer volume of individuals attracted to non-productive borrowing, particularly for items like gadgets, warrants our attention. This measure serves as a safeguard against lenient loan practices, drawing from historical lessons that highlight the risks stemming from lax appraisals in credit card and personal loan domains.”
Moreover, it's not just about reining in lending institutions; it's a concerted effort to protect the public. Jaya Vaidhyanathan, explains: “The RBI's broader focus, spanning from crackdowns on unregulated lending apps to cautioning against speculative market behaviour, reflects a holistic strategy. As we celebrate the resilient state of our banking system post the past decade's trials, it's imperative to acknowledge and address the mounting concerns in the peripheries—Fintechs, NBFCs, and the stock market. Our financial health depends not just on the stability of our banks but on a vigilant approach to the evolving challenges in adjacent financial sectors.”
With only 10% employing integrated risk management as per the FIBAC’ 23 survey, a strategic shift is imperative. Jaya Vaidhyanathan, forecasts: “In 2024, Indian banks will stand at a pivotal juncture. Also, the climate change brings a duality of opportunity and risk—$2.5 trillion in green finance potential and risk of allotting significant credit to industries, vulnerable to climate change. Adopting dedicated risk management frameworks, embracing innovative models and effective technology will be key in navigating these challenges, ensuring resilience, and capitalizing on emerging opportunities.”
