3 hrs ago
RBI Sees No NBFC Asset Quality Concerns, Expects Credit Growth
India's central bank says it does not currently see problems with the quality of loans made by non-bank finance companies.
Loans from banks to these companies have grown quickly.
The central bank governor expects overall bank lending to keep growing, although it may slow a little.
The policy committee raised its main interest rate to 5.5%.
It also changed its approach to calibrated tightening, meaning any further tightening would be measured and depend on economic conditions.
The governor said a rate cut is not expected in the near term.
The central bank is still trying to bring inflation toward the government's 4% goal.
Governor Sanjay Malhotra said the RBI sees no current asset quality concerns for non-banking financial companies.
Bank credit to NBFCs has risen around 37%, while overall bank credit growth is currently 19%.
Malhotra expects bank credit growth to remain strong, though it could moderate by a few percentage points.
The six-member Monetary Policy Committee unanimously raised the repo rate by 25 basis points to 5.5% and shifted to calibrated tightening.
The RBI remains focused on bringing inflation toward the government's 4% target; Malhotra said a near-term rate cut was ruled out by the stance.
- Who
- Reserve Bank of India Governor Sanjay Malhotra and the six-member Monetary Policy Committee.
- What
- The RBI reported no current NBFC asset quality concerns, projected continued strong bank credit growth, and raised the repo rate to 5.5% while adopting calibrated tightening.
- Where
- At the post-Monetary Policy Committee press conference; the article does not specify a venue.
- When
- Wednesday, at the post-Monetary Policy Committee press conference; no calendar date is specified.
- Why
- The RBI said future policy decisions will depend on changing economic conditions and growth-inflation dynamics, while it remains focused on its 4% inflation target.
Key facts
- Repo rate
- Raised by 25 basis points, from 5.25% to 5.5%.
- Policy stance
- Changed from neutral to calibrated tightening.
- MPC decision
- The six-member committee voted unanimously.
- Bank credit growth
- Currently 19%; expected to remain strong, though it could moderate by a few percentage points.
- Bank credit to NBFCs
- Rose by around 37%.
- Inflation target
- The RBI remains focused on the government's 4% target.
- Near-term rate outlook
- Malhotra said the calibrated-tightening stance rules out a rate cut in the near term.
Sources
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