RBI Deputy governor Anand Sinha recently said the central bank does not yet consider the rising bad loans of banks as a sign of a systemic risk.

“We don’t see any systemic risk from the current trend of rising non-performing assets. But, there could be some sectoral risks going forward,” Sinha said.

From in.finance.yahoo.com:

Banks have been witnessing rising risks from small- and medium-scale industries and unsecured portfolios, which primarily consist of personal loans and credit cards, apart from home loans.

Bankers had told RBI governor D. Subbarao last month that there was no systemic risk as of now for banks, even as the interest rate got tightened.

Yesterday, the chief financial officer of the State Bank of India ‘ the country’s largest lender ‘ Diwakar Gupta said his bank’s Rs 7,000-crore education loan had been witnessing pressure and the level of the stressed assets had reached 4 per cent of this exposure.

Calcutta-based United Bank chairman and managing director Bhaskar Sen had also said there were rising risks to assets, especially from the SMEs and the retail sector, and that he might look at increasing the tenor of the loan than increasing EMIs.

Sinha added, “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.”