Surge in top-up housing loans not system-wide issue, says RBI Governor

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.

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