The Reserve Bank of India has decided to reduce the risk weight for consumer credit, including personal loans, but excluding credit card receivables, to 100%.
Under the standardized approach for Credit Risk Management, consumer credit, including personal loans and credit card receivables attract a higher risk weight of 125 per cent or higher, if warranted by the external rating of the counter party. The move is likely to help lower loan pricing in the unsecured consumer credit space, the Reserve Bank of India (RBI) on Wednesday.
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