The Reserve Bank of India (RBI), in its recent monetary policy, has gone all-out to push credit growth — at below 10 per cent this fiscal — in an effort to boost consumption. On Wednesday, it announced two bold steps — first, increasing the retail limit on borrowing against shares and debt securities from ₹20 lakh to ₹1 crore per person; and second, raising the limit for IPO financing from ₹10 lakh to ₹25 lakh per person. There is no denying the potential of these steps to infuse liquidity in the hands of consumers. But they are unlikely to move the needle much on bank credit growth. However, the moves could encourage unwanted speculative activity, with downsides for investors and the banking system.

Lending against shares and other securities forms a small part of the overall bank credit

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