RBI Rules For Personal Loan: Reserve Bank has taken a big decision. Now the Reserve Bank of India has further tightened the rules related to personal loans which are considered unsafe for banks and non-banking financial companies (NBFCs).
RBI Rules For Personal Loan: Reserve Bank has taken a big decision. Now the Reserve Bank of India has further tightened the rules related to personal loans which are considered unsafe for banks and non-banking financial companies (NBFCs). The risk weightage has been increased by 25 percent. However, the revised rules will not apply to some customers. These include home loan, education loan and vehicle loan. The new rules will not apply to this type of loan.
Apart from this, this rule will also not apply to loans given against gold and gold jewellery. 100 percent risk weighting will be applicable on these loans.
Rules for personal loan
Let us tell you that high risk weightage means that when it comes to personal loans considered unsecured, banks will have to make a separate provision of more amount. In other words, high risk weighting limits banks’ ability to lend.
Shaktikanta Das gave information
Reserve Bank Governor Shaktikanta Das had recently talked about higher increase in some loans in the consumer loan category. He advised banks and non-banking financial companies to strengthen their internal monitoring systems, deal with increasing risks and take appropriate security steps in their own interest.
Das had also mentioned the high growth in consumer credit and increasing dependence of NBFCs on bank lending during his interactions with MDs/CEOs of major banks and large NBFCs in July and August respectively.
RBI gave information in the notification
RBI has said in a notification that on the basis of review, it has been decided to increase the risk weight in respect of consumer loans (outstanding and new) of commercial banks including personal loans. Under this, the risk weight has been increased by 25 percent to 125 percent. However, it does not include home loan, education loan, vehicle loan and loans taken on the basis of gold and gold jewellery.
The central bank has also increased the risk weight on loan receipts for banks and NBFCs by 25 percent to 150 percent and 125 percent respectively.