RBI: After banks, now fintech companies will cut down on small personal loans, RBI had warned

Big banks and non-bank lenders have asked their fintech partners to cut down on small personal loans. Sources said this step has been taken after the recent warning from RBI. The central bank believes that small personal loans may sink further.

An official of a private bank, which has given loans to about a dozen fintechs, said that this step had to be taken due to the subsequent decision of RBI. More banks can also take this step in future. We have told our fintech partners that we do not want to be present in the sub-Rs 50,000 loan category. Last month, RBI had tightened the rules to keep more capital additional for such loans. Another bank official said, we will not completely cut the funding given to our fintech partners. But, they will be instructed to stop unaccounted distribution of small personal loans.

Loan growth rate will decrease

Analysts believe that with this decision of banks and NBFCs, the loan distribution rate may come down to 12-14 percent, which is currently 15 percent. Macquarie said, regulatory surveillance on bank growth and asset quality i.e. NPAs has increased. Caution is being taken regarding this. A government banker said, we have asked our fintech partners to disburse only selected loans.