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RBI takes steps to avoid sub prime like situation in India

RBI to avoid sub prime like situation in India

Apnaloan.com Research Bureau

11 Apr 2008

Reserve Bank of India (RBI) has starting thinking from the borrower's perspective. To prevent the US type sub-prime crisis, RBI has starting taking required measures. The Central bank has asked the lenders to setup credit counseling centers which will warn the borrowers if their loan rises beyond their means.

American Banks provided home loans to even those who could not afford to repay their loans. Now they have realized the importance of promoting financial literacy. Today it is widely accepted that the crisis could have been avoided if borrower were made aware of their liabilities.
Banks aggressively marketed products like personal loan and credit card which resulted in creating debt trap for borrowers. This in turn led to bad loans. To avoid loans turning bad RBI has asked the banks to set up credit counseling centers.

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