RBI easing housing finance norms credit negative: Moody's

There is no change to the risk weights for housing loans of up to Rs 30 lakh

Rating agency Moody’s on Thursday said that the Reserve Bank of India’s (RBI) move to relax regulatory norms for housing finance might increase risks for banks.

The move is credit-negative, meaning their rating could be lowered and getting loans would be difficult.

On June 7, the RBI lowered the risk weights and standard asset provisioning for housing loans in select loan-size categories.

The lower capital requirements will weaken banks’ protection against the housing sector, which has grown rapidly in recent years, and will encourage greater lending.

Moody’s warned that this growth was occurring because non-bank finance companies (NBFCs) were increasingly