Bank, NBFC shares fall after RBI tighten norms on personal loans
PTI, Nov 17, 2023, 12:04 PM IST
Representative image (Source: Pexels)
Shares of bank and NBFC firms tumbled up to 7 per cent in morning trade on Friday due to heavy selling pressure after the Reserve Bank tightened norms for consumer credit.
State Bank of India shares fell 3.34 per cent, Axis Bank declined by 3 per cent, Canara Bank went lower by 2.67 per cent, and Bank of Baroda dipped by 2.31 per cent. Federal Bank (1.39 per cent), HDFC Bank (1.26 per cent), ICICI Bank (1.16 per cent) and IndusInd Bank (0.89 per cent) also declined on the BSE.
The BSE Bankex index fell 1.12 per cent.
Among non-banking financial companies, shares of SBI Cards and Payment Services tumbled 6.70 per cent, Ujjivan Financial Services fell 5 per cent, Arman Financial Services (3.91 per cent) and IIFL Finance (3.78 per cent).
The Reserve Bank on Thursday tightened norms for consumer credit as it asked banks and NBFCs to assign a higher risk weight for unsecured personal loans, a move aimed at making the lenders more cautious on such advances.
The risk weight on unsecured consumer loans has been raised by 25 percentage points.
The new regulations, however, will not be applicable on housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, the Reserve Bank said in a circular.
A higher risk weight means that lenders need to set aside more funds as a safety net for consumer loans, which could make such credit more expensive. In simple words, a higher risk weight restricts banks’ lending capacity.
In the circular, the RBI said, ”It has been decided to increase the risk weights in respect of consumer credit exposure of commercial banks (outstanding as well as new), including personal loans, but excluding housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, by 25 percentage points to 125 per cent”.
A similar raise has been effected in case of credit card receivables, as per the circular on ‘Regulatory measures towards consumer credit and bank credit to NBFCs (non-banking financial companies)’.
Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.
Top News
Related Articles More
Sensex, Nifty fall over 1 pc, snap two-day rally ahead of US Fed interest rate decision
SC orders liquidation of grounded air carrier Jet Airways’ assets
Home-cooked meals become dearer in October on costlier vegetables
Sensex, Nifty surge over 1 pc on heavy buying in IT stocks as Trump set to win US polls
Das says incoming data on GDP growth mixed but positives outweigh negatives
MUST WATCH
Latest Additions
Prime Minister’s brother Somabhai visits Udupi’s Sri Krishna Matha
M’luru: Flying squad shall curb illegal lotteries and betting, says ADC
Egg distribution scheme for school children under scrutiny over alleged mismanagement
India Post M’luru division to offer doorstep service to pensioners for Jeevan Praman certificate
Channapatna By-election: HDK releases audio of D K Suresh’s comments on Yogeeshwar
Thanks for visiting Udayavani
You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.