PM's Principal Secretary warns banks against lending euphoria

The Principal Secretary to the Prime Minister has cautioned banks against falling into a cycle of lending euphoria, stressing that financial institutions must keep project viability at the core of their credit decisions rather than being swept up by broader economic optimism.

The senior official underlined that sustaining India's economic growth would depend heavily on two pillars: improving the performance of the manufacturing sector and equipping the workforce with relevant skills. Both areas, the Principal Secretary noted, demand continued and focused attention from policymakers and industry alike.

The remarks signal concern at the highest levels of government that easy credit conditions could encourage reckless lending, potentially undermining the financial stability that underpins long-term growth.