Customer data completely safe in India.
With the Reserve Bank of India (RBI) taking a tougher stance on unsecured loans, Finance Minister Nirmala Sitharaman on Thursday cautioned that non-bank finance companies (NBFCs) and small finance banks should respect the red line and should not go too far in their enthusiasm.
Speaking at the Digital Acceleration & Transformation Expo event here, Sitharaman said these entities need to remain cautious in such lending as advised by the Reserve Bank of India (RBI).
“Enthusiasm is good but sometimes it becomes a bit too far for people to digest. So as a measure of caution, the RBI has also alerted small finance banks, NBFCs to be careful that they don’t go too far too soon and face any downside risks later,” she said.
The RBI recently hiked risk weight by 25% on lenders’ unsecured personal and credit card loans. According to Jefferies, banks’ overall personal loans stood at Rs 10.25 trillion as of June end whereas credit card loans stood at Rs 2.10 trillion.
RBI Governor Shaktikanta Das on Wednesday had said the central bank’s tougher stance on unsecured loans earlier this month was a preemptive move aimed at ensuring financial stability.
Rating agency ICRA observed that the latest notification by the RBI to increase the risk weights for consumer credit exposure (mainly on unsecured asset classes) of banks and non-banking financial companies (NBFCs) by 25% is likely to impact the loan sell-downs of personal loan retail pools, which had gained momentum in recent years. Loan sell-down (direct assignment transactions) by personal loan NBFCs amounted to about Rs 1,150 crore in FY23 and had already crossed Rs 800 crore in H1 FY24.
Concerned over the slow movement of the account aggregators (AA) scheme, Sitharaman on Thursday assured that customer data shared with aggregators is completely safe in India.
AAs are entities that enable financial data sharing from Financial Information Providers (FIPs) to Financial Information Users (FIUs), based on the consent from the customers.
Allaying concerns about data security, the minister said, “Initially, there were some apprehensions that possibly, account aggregators are going to sit over data bank.”
“They cannot hold data. They are just a pass-through. Neither the beneficiary customer nor the bank can sit on it through the AA. They will deal with it only for the purpose of giving credit”.
The AA scheme has not picked up and it can be better, which means either the building of awareness exercises is not sufficient, or adequate or there is a need for simplification of technology, she said.
“Banks, both public and private, have reviewed it with me once. Banks have become a member or a part of this account aggregators working, and it has actually helped,” she said.
Sitharaman said the government’s approach to creating public platforms for banking facilities ensures customer data protection.
“The moment you agree to be willing to give it, it will be shared without much hindrance. On data protection, I can assure Indian citizens your data remains completely safe,” she said.
Source:financialexpress.com