RBI tightens consumer credit and bank credit to NBFCs
RBI today has decided to increase the risk weights in respect of consumer credit exposure of commercial banks by 25% to 125%
This excludes housing loans, education loans, vehicle loans and loans secured by gold
RBI today has decided to increase the risk weights in respect of consumer credit exposure of commercial banks by 25% to 125%
Seems like Bandhan Bank, RBL Bank, Bajaj Finance, SBI Card more to be impacted…
🚨Had warned multiple times on unsecured retail credit👇
RBI comes and now checks the banks
ICICI Bank:-
We pulled back on 50,000cr worth of unsecured loans
HDFC Bank
We are careful with unsecured retail credit
Bajaj Finance:-
We are careful about mispriced loans in unsecured space
RBI Governor:-
There is a bubble in unsecured retail credit
But, Small banks and NBFCs keep growing at a very fast space in unsecured retail credit!
The next waive of NPAs will come from
Unsecured retail loans i.e. personal loans and credit cards
RBI Acts now:-
🏦Consumer credit by banks and NBFCs to attract 125% risk weight, from 100% previously.
🏦Credit card loans by banks to attract 150% risk weight from 125% previously.
🏦Credit card loans by NBFCs to attract 125% risk weight from 100% previously
This means that RBI is saying unsecured are even more riskier.
The capital that the bank will have to set aside every time they give out loans is higher now.
This is negative for all risk-taking NBFCs and Banks.
This is positive for all Risk Averse NBFCs and Banks
Kudos to the RBI for making sure to check the bubble in the unsecured space
www.intellexconsulting.com, www.startupstreets.com, www.intellexCFO.com, www.economiclawpractice.com
