State Bank of India’s chairman Dinesh Kumar Khara on Friday said the Reserve Bank of India’s move on consumer loans would not affect the lender’s ability to grow.
“I think overall, we are not really impacted as much in terms of our ability to grow and support the book which we have. But yes, of course, there could be certain other entities which
might experience some kind of a pressure as far as supporting this kind of book is concerned,” Khara said in an interview with ET Now.
The impact of the increased risk weight on personal loans, including credit cards, will be 55-60 bps, said the SBI chairman.
Further, Khara said that SBI's capital adequacy ratio stood at 14.28% as of September end.
«If we take into account the bank's half-yearly profit, which has not yet been adjusted in the capital ratios, then the capital adequacy ratio will rise by 109 bps,» Khara said.
India's banking regulator on Thursday slammed the brakes on the unbridled growth in consumer loans that lately expanded faster than less risky lending assets, directing banks to set aside more capital and establish board-monitored processes on such advances to prevent risk escalation in the financial system.
The RBI increased risk weights on consumer loans from banks, non-banking finance companies (NBFCs) and credit card providers, making it more expensive for lenders across the spectrum to offer loans in these segments. That will mean higher interest rates for all borrowers.
Furthermore, bank lending to NBFCs will also become more expensive as risk weights on these loans have also been raised beyond a specified threshold.