 "RBI, Reserve Bank of India")
The Reserve Bank of India’s (RBI’s) decision to relax risk weights on loans to non-banking financial companies (NBFCs) and microfinance institutions (MFIs) is being seen as a macroprudential measure to support economic growth. It will free up 20–30 basis points (bps), or ₹40,000 crore, in capital for the banking system at an aggregate level, translating into ₹4 trillion in additional loanable funds. However, given the tight liquidity situation, policy transmission could take some time, experts said.
In November 2023, the RBI increased the risk weights on bank loans to NBFCs from 100 per cent to 125 per cent. On Tuesday,
