![]() Secondly, the increase in risk weights on regulated entities' unsecured personal loan exposure may affect the capital buffers of NBFCs, resulting in a slowdown in lending in the near term. NBFCs' risk weights have also been raised by 25% to 125%.įirstly, banks may adjust loan pricing to NBFCs to counteract the increased capital buffer requirement, potentially resulting in a moderation of bank lending to NBFCs not covered by priority sector lending (PSL) guidelines. Additionally, credit card receivables of scheduled commercial banks will now have a risk weight of 150% instead of the previous 125%. This means an increase in capital requirement of Rs 2.25 for every Rs 100, or 20%, he was quoted as saying. Assuming a 9% capital adequacy ratio (CAR), banks now need to set aside 9% of Rs 125, which comes to Rs 11.25 compared to Rs 9 for every Rs 100 in personal loan receivables under the previous rule. Due to the new rule, the risk-weighted assets are now Rs 125. Adhil Shetty of explains that previously, for every Rs 100 in personal loan receivables, the risk-weighted assets would be Rs 100. This will lead to changes for the lenders. With the increase in risk weightage, lenders now have to maintain higher capital reserves for riskier loans. Lenders regulated by the RBI are required to maintain a certain proportion of capital based on the loan amount they lend. ![]() This means that borrowers will have to pay more for their personal loans, said an ET report. ![]()
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