Risk weight hikes by RBI: Maintaining credit score now more crucial

If you're finding it difficult to secure a personal loan or credit card, be prepared to offer some collateral

The Reserve Bank of India (RBI), in a circular dated November 16, 2023, increased the risk weights on consumer credit exposure (both existing and new) of commercial banks and non-banking financial companies (NBFCs) from 100 per cent to 125 per cent.

For credit card receivables, the risk weights for scheduled commercial banks were raised from 125 per cent to 150 per cent and for NBFCs from 100 per cent to 125 per cent.

Risk weights on bank credit to NBFCs were also increased. The regulator also mandated that banks and NBFCs place limits on consumer credit and its various sub-segments.