Bank of Baroda calms fears over unsecured loan portfolio

The Bank of Baroda has reassured stakeholders about the stability of its unsecured loan portfolio. Joydeep Dutta Roy, a representative of the bank, emphasized the institution’s strong position, supported by a reliable customer base with steady salary inflows. This statement comes in the wake of heightened regulatory attention on unsecured lending practices.

Earlier in October 2023, during the Monetary Policy Committee (MPC) event, Reserve Bank of India (RBI) Governor Shaktikanta Das highlighted the necessity for more robust internal controls in the sphere of unsecured lending. He also indicated that the RBI plans to closely examine any lax lending practices within the sector.

Following up on these concerns, last Wednesday, the RBI took a decisive step to safeguard the banking system by increasing risk weights on consumer loans by 25%. This move is intended to enhance capital adequacy ratios for banks and non-banking financial companies (NBFCs), thereby fortifying their financial health against potential risks associated with unsecured loans.

The proactive measures by the RBI, coupled with Bank of Baroda’s confirmation of a secure customer base, aim to maintain the integrity and stability of India’s financial system amidst a landscape of growing unsecured credit.

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