Flawed Collateral Valuation
Tantri also pointed out systemic flaws in the way collateral is valued in India’s banking system. He criticized the assumption that collateral guarantees loan safety. “People think giving Rs 100 as security and Rs 80 as a loan is safe. But in case of default, that Rs 100 collateral often sells for Rs 50 or 40. It’s not as secure as it appears,” he remarked.
Impact of NBFC Closures
He further raised concerns about the government’s policies toward Non-Banking Financial Companies (NBFCs), many of which have faced closures. “We’re shutting down NBFCs and merging banks, making them larger. This reduces access to credit for small businesses and individuals,” he added.
Call for Reform
Tantri warned that the current approach to credit could have long-term consequences for India’s economic growth and innovation. “If we don’t improve our credit infrastructure, we will stifle growth and create monopolies. Entrepreneurship needs easy access to credit to thrive,” he concluded.
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