Rajan warns against aggressiveness of Indian banks in retail loans

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Mumbai, dt. 19

Former Reserve Bank of India Governor Raghuram Rajan has sounded a warning for Indian banks moving more towards retail lending, saying such lending becomes risky in a recession.

Is retail lending properly evaluated? Banks properly assess the risks involved, right? Rajan said in a press interview at Davos.

Rajan's warning becomes important amid the aggressiveness seen in retail loans by Indian banks in recent years.

There has been a sharp increase in the retail loans of banks as compared to the larger ones.

Referring to the problems seen earlier in infrastructure sector lending, Rajan said, banks should ensure that the risks associated with retail lending are checked before disbursing it.

In 2007, 2008 and 2009, the country's banks released huge structural loans because the situation seemed good at that time, but then the loans became a problem for the banks.

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