Riskproofing small loans

Copied below is my response published in The Hindu Business Line today M G Warrier October 25, 2023 Letters Riskproofing small loans* This refers to "Lenders flag risks in small ticket loans post RBI caution" (The Hindu Business Line, October 25). Making big banks go slow in lending to small borrowers for whatever reason will have adverse effects on the flow of credit to the deserving sectors in the economy. Credit flow in rural and semi-urban areas is already affected by the restrictions rightly imposed on cooperatives for valid reasons. Laxity in credit appraisal and supervision of lending to small borrowers was a byproduct of big banks using NBFCs, SHGs and other entities as conduits for delivery of credit in rural areas. RBI's present guidance is loud and clear about the inevitability ofe regulation and supervision of credit irrespective of the size of loans or the purpose for which money is lent. Central Bank has to protect the interest of depositors at any cost. Any loan going bad results in proportionate loss to the depositor or taxpayers. M G Warrier Mumbai *Published in The Hindu Business Line on October 26, 2023.

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