SBI chairman, Dinesh Khara says bank's unsecured lending to moderate after RBI tightening
Bank of India's move to mandate higher risk weights on consumer loan segment, the State Bank of India will see “moderation" in its unsecured lending portfolio, said SBI Chairman Dinesh Khara on Wednesday. He also said that the impact of higher risk weights will have a 0.02-0.03 per cent impact on its net interest margins in the December quarter. However, a better picture is likely to emerge in the next quarter, said Dinesh Khara.
Also Read: India Q2 GDP preview: India's growth likely moderated to about 7% in Q2; experts expect further moderation "Whatever we were doing, we will continue to do, but there will be a moderation," Khara told reporters on the sidelines of a FIBAC event here, when asked about the RBI's tightening of norms. Earlier this month, the national banks regulator had asked lenders to be cautious and increase risk weights on unsecured lending for banks as well as non-banks. Also Read: RBI governor cautions against lending exuberance, overreliance on fintech models The RBI has asked lenders to allocate more funds against each risky loan.
The move will ensure better cushioning of these unsecured loans with higher buffers to help in case of any stress. On the other hand, the announcement will result in personal loans and credit card borrowings getting costlier. Also Read: Americans want to invest here but young Indians ‘bitten by bug to travel’, says Nithin Kamath; netizens disagree Due to the increasing cost of funding, the interest rates on such loans will also go up, pointed out Khara.
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