– Personal loan interest rates may increase by 30-40 basis points. Due to increasing the risk weightage on consumer loans by the Reserve Bank of India (RBI), now banks are also considering increasing interest rates.
According to media report, top officials of three big banks of the country have said that they are considering increasing the interest rates on personal loans soon. Consumer loans also include loans like housing loan, education loan, vehicle loan and gold loan. But RBI has increased the risk weightage only on personal loans. Not on the rest.
Banks will need more capital.
A banker said that due to increase in risk weighting, banks will need more capital. Bank costing will increase. Banks will pass this increased expense on to the consumer. Banks can increase personal loan interest rates by 30-40 basis points. The special thing is that this decision will not only affect the new loans, the interest rates on the old personal loans which are already running will also increase.
At the same time, another banker told Moneycontrol that due to the obligation to maintain more capital, the bank will have to increase the interest on personal loans. The bank is considering an increase of about 40 bps. Similar views were also expressed by the third banker. State Bank of India Chairman Dinesh Khara has already said that if the cost of funds of banks increases, it will affect the interest rates.
Unsecured loans are increasing.
Unsecured loans are increasing in the country. RBI has become a bit strict regarding retail loans in recent times, hence after seeing the open approval given by the banks on unsecured loans, it felt that some control is needed here, hence recently it increased the risk weightage to 25 percent. Made an increase.
HDFC Bank, the country’s largest private sector bank, reported a 15.5 percent growth in its personal loan portfolio in the second quarter of FY24. Similarly, in the July-September quarter, ICICI Bank’s personal loan portfolio increased by 40 percent to Rs 1.04 lakh crore and its credit card portfolio increased by 29.5 percent to Rs 43,230 crore.
What is risk weighting?
Personal loan is an unsecured loan. It carries the highest risk because it has no collateral. The risk of drowning is highest. In such a situation, RBI asks banks to keep a buffer of extra amount with them for giving unsecured loans. RBI wants that the riskier the loan, the higher the weightage. So that banks do not affect liquidity by distributing loans openly and money depreciation does not occur.
