Stay updated with breaking news from Risk Weights. Get real-time updates on events, politics, business, and more. Visit us for reliable news and exclusive interviews.
Capital allocation may not necessarily become more prudent due to risk weight changes. Commercial compulsions may force lenders to reduce potential lending in less risky segments even as they meet increased capital requirements due to hike in risk weights of a specific loan segment
The directive is a clear negative as the lending business is key to profitability
RBI increases risk weights on unsecured consumer loans to address systemic risk, consumers should be cautious and exercise financial prudence.
“The Reserve Bank of India just wants balanced growth between all segments. So what it is saying is that on the unsecured personal loan, perhaps the 24% growth rate should be lower and closer to the overall growth rates of 15% but still 15-20% growth rate is very strong growth.”
The comments by the finance minister come a day after Reserve Bank of India Governor Shaktikanta Das advised banks and non-bank finance companies to be careful and ensure that credit growth exuberance is avoided