RBI, is foreseeing a risk in the system of excess liquidity, has measured to raise the risk weightage of unsecured loans from 100% to 125% and credit cards from 125% to 150%. This may be in anticipation of a rise in NPAs and highly for categories like Credit Card and Personal Loans, in the future.
And to safeguard banks equity and reduce the outflow of funds to high-risk assets. This will have a moderate effect on the bank’s earnings growth, with an increase in lending rates especially for NBFCs, fall in consumer demand and flow of liquidity in the economy.
The author, Vinod Nair, is Head of Research at Geojit Financial Services. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.Milestone Alert!
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