{"id":269698,"date":"2023-11-17T20:22:15","date_gmt":"2023-11-17T14:52:15","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=269698"},"modified":"2023-11-17T20:22:15","modified_gmt":"2023-11-17T14:52:15","slug":"risk-weighted-assets-rbi-raises-risk-weights-on-consumer-credit-exposure-of-banks-nbfcs-to-125","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/risk-weighted-assets-rbi-raises-risk-weights-on-consumer-credit-exposure-of-banks-nbfcs-to-125\/","title":{"rendered":"Risk Weighted Assets: RBI raises risk weights on consumer credit exposure of banks, NBFCs to 125%"},"content":{"rendered":"<p><b>Source: <\/b><span style=\"font-weight: 400;\">The post is based on the article <\/span><b>\u201cRisk Weighted Assets: RBI raises risk weights on consumer credit exposure of banks, NBFCs to 125%\u201d<\/b><span style=\"font-weight: 400;\"> published in <\/span><b>\u201cThe Hindu\u201d on 17th November 2023<\/b><\/p>\n<h2>Why in the News?<\/h2>\n<p><span style=\"font-weight: 400;\">Reserve Bank of India(RBI) has increased the risk weights of assets for the unsecured lending issued by banks and non-banking financial companies (NBFCs).<\/span><\/p>\n<h2>What are Risk Weighted Assets(RWA)?<\/h2>\n<p><span style=\"font-weight: 400;\">1)Risk-weighted assets are used to determine the minimum amount of capital a bank must hold in relation to the risk profile of its lending activities and other assets.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">2)This is done in order to reduce the risk of insolvency and protect depositors. The more risk a bank has, the more capital it needs on hand.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">3)The capital requirement is based on a risk assessment for each type of bank asset. For example, a loan that is secured by a letter of credit is considered to be riskier than a mortgage loan that is secured with collateral and thus requires more capital.<\/span><\/p>\n<h2>Why has RBI increased the Risk Weighted Assets(RWA) on unsecured loans?<\/h2>\n<p><span style=\"font-weight: 400;\">Indian Banks are experiencing a significant increase in unsecured loans, particularly in personal loans and credit cards. This increase is happening faster than the overall growth of bank credit.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That&#8217;s why, RBI has increased the <\/span><span style=\"font-weight: 400;\">risk weighted assets on unsecured loans.<\/span><\/p>\n<p><b>Impact of this move<\/b><span style=\"font-weight: 400;\">: Loans may become a bit expensive.<\/span><\/p>\n<p><strong>UPSC Syllabus:<\/strong> Economy<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: The post is based on the article \u201cRisk Weighted Assets: RBI raises risk weights on consumer credit exposure of banks, NBFCs to 125%\u201d published in \u201cThe Hindu\u201d on 17th November 2023 Why in the News? Reserve Bank of India(RBI) has increased the risk weights of assets for the unsecured lending issued by banks and&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/risk-weighted-assets-rbi-raises-risk-weights-on-consumer-credit-exposure-of-banks-nbfcs-to-125\/\">Continue reading <span class=\"screen-reader-text\">Risk Weighted Assets: RBI raises risk weights on consumer credit exposure of banks, NBFCs to 125%<\/span><\/a><\/p>\n","protected":false},"author":10317,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127],"tags":[11872],"class_list":["post-269698","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","tag-9pm-daily-factly","entry"],"jetpack_featured_media_url":"","views":{"total":16,"cached_at":"","cached_date":1700254042},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/269698","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10317"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=269698"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/269698\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=269698"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=269698"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=269698"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}