This according to a recent statement from the South African Reserve Bank based on in its regular review of the financial system.
Growth of unsecured loans - which don't require collateral and are riskier and more lucrative for banks - has surged over the last year as lenders push to offset weak corporate demand for credit.
The trend has caused some policy makers and analysts to caution that banks are too eager to extend more credit to debt-laden households.
However, in its Financial Stability Review, the central bank said unsecured lending accounted for just 8 percent of total credit extended by major banks. "At these levels unsecured lending does not constitute a bubble,".
"This should also be seen against the background of a banking sector that is managing its exposure to unsecured lending prudently."
Reserve Bank Deputy Governor Lesetja Kganyago struck a concerned tone more recently, saying that unsecured lending was "growing too fast".
Unsecured lending exposure among six selected banks grew by 11.3 percent year-on-year as of December 2011, the central bank said.
The central bank further allayed fears saying the major lenders had little exposure to debt-troubled Greece, Italy, Ireland, Portugal and Spain.
It reaffirmed its view that banks will face challenges in meeting tougher liquidity demands from the coming Basel III regulations. However, it said weak overall demand for credit should help lenders with the liquidity requirements.
Publisher: eProp
Source: SARB
