The minister of state of finance, PK Bansal, said there were no specific instances of significant losses suffered by large financial institutions in India from the US sub-prime mortgages. However, there was some slowdown observed in the overall credit growth. In the retail segment, the retardation has been largely due to various policy measures and high interest rates, he said on Tuesday while answering questions raised by Rajya Sabha member, Rajeev Chandrasekhar.
Chandrasekhar had asked whether the government was aware of the significant loses suffered by large financial institutions from sub prime mortgages in the US and the slowdown of that economy having caused any losses in the financial mobilization for retail loan and mortgages.
Retail loan portfolio of banks comprises housing loans, consumer durables, credit card receivables, auto loans and other personal loans. Bansal said that National Housing Bank (NHB) regulates the housing companies in the country.
Systemic oversight for housing finance companies (HFCs) is provided for in terms of the statutory provisions of the National Housing Bank Act, 1987 and the Housing Finance Companies Directions, 2000 issued under the Act. These cover entry level regulation, measures to ensure financial health and risk mitigation through prudential norms for capital adequacy, asset classification, income reorganization, provisioning, limit for exposure and credit concentration. The Reserve Bank also has an elaborate systemic oversight mechanism for banks operating in India and overseas, Bansal told the house.
