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The ban on two lending products could affect customer acquisition. The risk weight increases would gobble up much of the recently raised capital for growth purposes.
By nature, NBFCs tend to have looser credit covenants than banks and are more flexible in terms of taking on riskier assets. Tell-tale signs of trouble are already emerging through the increase in delinquencies for smaller NBFCs and even for larger lenders in the September quarter
Tighter Reserve Bank of India norms mean that the bank risk weights on loans for AAA NBFCs have now more than doubled to 45% from 20% earlier, while those for AA-rated NBFCs have increased to 55% from 30% and for A- rated NBFCs to 75% from 50% earlier. Higher risk weights require banks to set aside more capital to provide cover against such loans.
India Business News: The Reserve Bank of India has increased the risk weight on consumer credit, making it costlier for banks and non-banks to lend to this segment. The mo
Regulatory intervention and share buyback contribute to sink bank’s core ratio to lowest point since 2016