RBI Flags Speculative Use of Top-Up Loans

Reserve Bank Governor Shaktikanta Das highlighted a trend of speculative use of top-up loans found in some banks. The RBI plans to address issues bilaterally. Meanwhile, an outage in payment services prompted the National Payments Corporation of India to block further transactions temporarily to prevent system-wide issues.

Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday announced that certain banks have been found to use top-up loans for speculative purposes, although he characterized it as a localized issue rather than a threat to the entire banking system.

Das affirmed that the RBI would address these deficiencies individually with the affected banks, emphasizing the need for strict adherence to regulatory requirements concerning loan-to-value ratios, risk weights, and fund use monitoring.

In relation to last week's payment service outages, Das noted that the National Payments Corporation of India (NPCI) preemptively blocked transactions with affected service providers to mitigate potential systemic risks, underscoring the critical nature of disaster recovery and business continuity planning.