This adjustment applies to both existing and new loans. However, it excludes housing loans, education loans, vehicle loans, loans secured by gold and gold jewellery, and microfinance loans. Typically, commercial banks and non-banking financial companies (NBFCs) face a risk weight of 100 per cent for loan exposures.
A hike in risk weights may lead to higher interest rates and reduced access to credit for consumers as banks adjust lending practices to meet increased capital requirements. This could impact borrowing costs and limit the availability of loans.
Here is a list compiled by Paisabazaar.com of interest rates and other charges for leading banks as of November 15:
Also Read : India bond yields seen easing as oil, US peers decline; debt sale eyed
The RBI’s move to tighten norms on personal loans follows concerns raised by RBI Governor Shaktikanta Das regarding the rapid growth in consumer credit and the rising reliance of NBFCs on bank borrowings.
“Certain components of personal loans are, however, recording very high growth. The Reserve Bank is closely monitoring these for any signs of incipient stress. Banks and NBFCs would be well advised to strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards in their own interest. The need of the hour is robust risk management and stronger underwriting standards,” said Das In his October monetary policy address.