RBI Governor Shaktikanta Das on Thursday said not acting on unsecured lending could have created a "bigger problem", and RBI's actions on such practices have had the desired impact of slowing down growth in the riskier segment.
Addressing an international conference on financial resilience at the RBI's College of Supervisors here, Das said restrictions on unsecured lending were the result of a view that there could be a potential problem in the credit market because of growth in unsecured lending.
The overall headline parameters were looking good, but there was "clear evidence" of dilution of underwriting standards, lack of proper appraisals and a mentality to join the bandwagon for driving up the unsecured lending among some lenders, he added.
"We thought if left unattended, these vulnerabilities can become a bigger problem. So, we thought it is better to act in advance and slow down the credit growth," Das said.
He expressed satisfaction that the RBI's action has had the desired
