RBI Increases Risk Weights for Consumer Loans

On 16th November, 2023, the Reserve Bank of India (RBI) directed banks and non-banking financial companies (NBFCs) to increase the risk weights for consumer credit and bank credit by an extra 25 percentage points.

Key Points

  • RBI has increased it by 25 percentage points, from 100% to 125% for commercial banks and NBFCs. This applies to personal loans (and retail loans for NBFCs), excluding housing, education, vehicle loans, and loans secured by gold.
  • Presently, scheduled commercial banks have a risk weight of 125% for credit card loans while NBFCs have 100%.The RBI plans to increase this to 150% and 125%, respectively.
  • The ....
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