Reserve Bank of India has increased the risk weight for personal loans for banks by 25%.

Daily Current Affairs / Reserve Bank of India has increased the risk weight for personal loans for banks by 25%.

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Category : Business and economics Published on: November 20 2023

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Recently the Reserve Bank of India has increased the risk weight for personal loans for banks by 25%.
Earlier the risk weight for personal loans was 100%.
Now it has become 125%.
These standards will be applicable to scheduled banks and non-banking financial companies.
Higher risk weighting implies that banks have to set aside more money as a buffer when it comes to unsecured personal loans.
In simple words, high risk weight limits the ability of banks to lend.