Mumbai, November 16
The RBI on Thursday tightened norms for consumer credit as it asked banks and NBFCs to assign a higher risk weight for unsecured personal loans, a move aimed at making the lenders more cautious on such advances.
The risk weight on unsecured consumer loans has been raised by 25 percentage points.
Will not apply on home, auto loans
- The new norms, however, will not be applicable on housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery
- A higher risk weight means lenders need to set aside more funds as a safety net for consumer loans, which could make such credit more expensive
The new regulations, however, will not be applicable on housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, the RBI said.
A higher risk weight means that lenders need to set aside more funds as a safety net for consumer loans, which could make the such credit more expensive. In simple words, a higher risk weight restricts banks' lending capacity. The move comes within a month of RBI Governor Shaktikanta Das flagging concerns over a high growth seen in consumer credit segment.
Most Read In 24 Hours
Don't MissView All
Light at the end of tunnel: All 41 trapped workers rescued in Uttarakhand; President Murmu, PM Modi laud rescuers, workers
17-day rescue mission involved over 200 experts from various...
Rat-hole mining explained: Controversial technique that comes to rescue of 41 workers trapped in Uttarakhand tunnel
National Green Tribunal in 2014 imposed a ban on coal mining...
41 workers were trapped in under-construction tunnel on Diwa...
Prime Minister salutes spirit of all the people associated w...
Petitioner contended that engaging Pakistani artistes would ...