Personal Loan Interest Rate: RBI has tightened the rules related to personal loan. In the revised norms, the risk weight has been increased to 25 percent. The revised rules will not apply to certain consumer loans including home loans, education and vehicle loans.
Mumbai: The Reserve Bank of India on Thursday tightened the rules related to personal loans considered unsafe for banks and non-banking financial companies (NBFCs). In the revised norms, the risk weight has been increased to 25 percent. RBI said that based on the review, it has been decided to increase the risk weight in relation to the risk in the loan case. Under this, RBI has increased the risk weight for banks and NBFCs by 25 percent to 150 percent and 125 percent respectively.
Will not apply here
However, the revised rules will not apply to some consumer loans including home loans, education and vehicle loans. Apart from this, this rule will also not apply to loans given against gold and gold jewellery. 100 percent risk weight will be applicable on these loans.
What is higher risk weight?
Higher risk weight means that when it comes to personal loans considered unsecured, banks will have to set aside a higher amount. In other words, this weight limits the ability of banks to give loans.
Warned earlier also
Reserve Bank Governor Shaktikanta Das had recently talked about higher increase in some loans in the consumer loan category. He advised banks and NBFCs to strengthen their internal surveillance systems, deal with increasing risks and take appropriate security steps in their own interest. Das had also mentioned the high growth in consumer loans and the increasing dependence of NBFCs on bank lending during his interactions with senior executives of major banks and large NBFCs in July and August.
‘Reduction in inflation, but difficulties are not over’
Retail inflation has declined due to monetary policy measures and intervention on the supply front. But we are still not out of trouble and there is still a long way to go. This has been said in the bulletin of the Reserve Bank of India (RBI) for the month of November released on Thursday. An article on the state of the economy in the bulletin also said that the global economy is showing signs of softening in the current quarter. There has been a decline in the manufacturing sector. At the same time, it seems that the boom in service sector activities after the pandemic has reached its end.
It also said that tightening financial conditions is a significant risk to the global outlook. These things have been said in the article taken by the team led by RBI Deputy Governor Michael Debabrata Patra. However, RBI has clearly stated that the views expressed in the article are those of the authors and do not represent the views of the central bank. The article further states that the country’s current account deficit is soft while foreign exchange reserves are in good shape. The pace of growth has accelerated. Due to this, GDP has reached above the pre-pandemic level and India has become the fifth largest economy in the world.