The Reserve Bank of India Deputy Governor, Mr Anand Sinha, today said that though bad loans are rising in the system, the central bank does not see it a systemic risk as yet.

Talking to reporters on the sidelines of the FICCI-IBA summit here, the Deputy Governor said: “We don’t see any systemic risks from the current trend of rising non-performing assets. But, there could be some sectoral risks going forward.”

He was responding to a question in the wake of the rising interest regime as the central bank has jacked up its key lending rate by 425 basis points in the past 15 months to batten down inflation.

He further said, “I would not say we are particularly worried about retail loan segment, but yes, the retail segment is the one that is likely to feel the pressure.”

Banks have been witnessing rising risks from small and medium scale industries as well as in their unsecured portfolios, which primarily consist of personal loans and credit cards business apart from the home loans front.

The Kolkata-based United Bank Chairman and Managing Director, Mr Bhaskar Sen, too, said that there are rising risks to his assets, especially from the SMEs and the retail sector and that he may look at increasing in the tenor of the loan than increasing the EMIs.

On the impact of the Basel III on the domestic banks, especially on the state-run banks, which control over 70 per cent of the banking assets in the domestic system, Mr Sinha said the Government will have to infuse funds into the banks to ensure that they are adequately capitalised so that banks can continue to fuel the economy.

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