SBI Card, Bajaj Finance, HDFC Bank, other financials fall after RBI tightens consumer loan norms
Bajaj Finance, SBI Card, ICICI Bank, HDFC Bank, among others witnessed selling pressure on Friday after the Reserve Bank of India (RBI) tightened norms for personal loans and credit cards. The Bank Nifty index dropped over 0.7%, while Nifty Financial Services declined over 0.6% in early trade on Friday with SBI Card shares falling the most over 6%. The RBI on November 16 raised the risk weights for lenders and NBFCs by 25 percentage points to 125% on unsecured retail loans.
The central bank hiked the risk weights credit card exposures by 25 percentage points to 150% and 125% for banks and NBFCs, respectively. It has also asked the banks to set aside additional capital against loans to NBFCs, where the risk weight is currently below 100%. Read here: RBI tightens norms for personal loans and credit cards, raises capital requirements The new risk weight, or the capital that banks need to set aside for every loan, will apply to personal loans for banks and to retail loans for NBFCs, the RBI said.
The housing, education and vehicle loans as well as loans secured by gold and gold jewellery will be excluded, added the RBI. Analysts expect the new norms to make personal loans and credit cards costlier and may curb growth in these categories. “This is negative for the entire sector as it takes away the growth multiple and would increase Cost of Funds (CoF) for NBFCs.
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