RSS Feed
Twitter
4:10 AM
Blogger
Reserve Bank of India governor Shaktikanta Das’s decision to put an end to the consumer credit party took its toll on share prices of retail lenders as markets evaluated the capital required by these institutions. Financials experienced significant losses, contributing to the downturn in major indices. Ratings agency S&P and an SBI report have said that the capital requirement for banks would go up by 60 basis points (100 basis points equals 1 percentage point).from Business News: Latest News on Business, Stock Markets, Financial News, India Business & World Business News https://ift.tt/p42BoIw
Shares of bank and non-banking financial companies (NBFCs) dropped by up to 7% in morning trade due to heavy selling pressure after the Reserve Bank of India (RBI) tightened norms for consumer credit. The RBI has increased the risk weight for unsecured personal loans, requiring banks and NBFCs to set aside more funds as a safety net for such advances. The new regulations do not apply to housing loans, education loans, vehicle loans, and loans secured by gold and gold jewellery.
Shares of Indian lenders, including SBI Cards & Payment Services and Bajaj Finance, dropped by at least 3% each after the Reserve Bank of India (RBI) announced measures to increase buffers on consumer loans. The NSE Nifty Bank Index fell by 1.3%, with SBI Cards declining by 6.8%. The RBI's move aims to control the surge in unsecured debt, and banks may raise rates and tighten lending norms as a result. RBI governor Shaktikanta Das has been urging banks to enhance internal controls.
Following up on its earlier caution, RBI decided to act on the looming threat of unbridled growth in unsecured and personal loans metastasising into a bigger problem. Ever since RBI governor Shaktikanta Das publicly flagged high growth in personal loans and credit card outstanding, banks have been seeking to play down the concerns, arguing that their unsecured book forms a very small portion of loan portfolio, and it was the NBFCs and fintech players that were undertaking that business.
