The governor of India’s central bank warned the country’s lenders against “all forms of exuberance” just days after tightening the rules for consumer loans.

Although credit growth is accelerating, banks and non-bank finance companies (NBFCs) must ensure lending to individual categories is “sustainable”, governor Shaktikanta Das said in Mumbai on Wednesday.

“All forms of exuberance must be avoided,” he stated.

The Reserve Bank of India (RBI) last week asked banks to assign additional capital against personal loans and lending through NBFCs on fears surging demand for consumer credit may result in an accumulation of risk, Reuters reports.

The tightening of lending restrictions is forecast to drive up borrowing costs and impact consumer loan growth, which has been rising at almost double the pace of overall bank credit.

“These measures are pre-emptive in nature; they are calibrated and targeted,” the central bank governor went on to say.

In addition, Das requested lenders to be mindful of an accumulation of stress stemming from new lending models.

“Banks and NBFCs need to be careful in relying solely on pre-set algorithms” for making lending decisions, he commented.

Last week, the central bank didn’t tighten capital rules for home, vehicle or gold loans and doesn’t see any indications of stress currently in housing or vehicle loans, the governor added on Wednesday.

That said, he cited risks that could arise from the interrelation between banks and NBFCs and requested non-bank lenders to increase their funding sources, the Reuters report goes on to say.

In addition, Das said that micro-lenders need to decide whether the loans are affordable for consumers on a lower income.

“Though the interest rates are regulated, certain microfinance institutions (MFI) appear to be enjoying relatively higher net interest margins,” Das stated.

“MFIs should ensure that the flexibility provided to them in setting interest rates is used judiciously.”