Banks are going to exercise strict vigilance on the credit history of borrowers who are going to opt for a personal loan or consumer loans since it has been observed that most borrowers default on such loan categories. RBI has told banks to keep a strict check on the borrowers credit history so as to for see a default in future by the borrower and cancel the loan application.
State Bank’s Chairman O P Bhatt said that rising levels of stressed assets may push up defaults in the domestic banking system and banks need to enhance their risk management mechanisms to tackle the issue.
“Defaults in certain portfolios like consumer and personal loan categories might go up in the months ahead and banks need to be cautious to maintain the quality of their portfolios,” Bank of Baroda’s Chairman and Managing Director M D Mallya added.