Personal loan interest rates may increase by 30-40 basis points. Due to increasing the risk weightage on consumer loans by the Reserve Bank of India (RBI), now banks are also considering increasing interest rates.

According to media report, top officials of three big banks of the country have said that they are considering increasing the interest rates on personal loans soon. Consumer loans also include loans like housing loan, education loan, vehicle loan and gold loan. But RBI has increased the risk weightage only on personal loans. Not on the rest.

Banks will need more capital.

A banker said that due to increase in risk weighting, banks will need more capital. Bank costing will increase. Banks will pass this increased expense on to the consumer. Banks can increase personal loan interest rates by 30-40 basis points. The special thing is that this decision will not only affect the new loans, the interest rates on the old personal loans which are already running will also increase.

At the same time, another banker told Moneycontrol that due to the obligation to maintain more capital, the bank will have to increase the interest on personal loans. The bank is considering an increase of about 40 bps. Similar views were also expressed by the third banker. State Bank of India Chairman Dinesh Khara has already said that if the cost of funds of banks increases, it will affect the interest rates.

Unsecured loans are increasing.

Unsecured loans are increasing in the country. RBI has become a bit strict regarding retail loans in recent times, hence after seeing the open approval given by the banks on unsecured loans, it felt that some control is needed here, hence recently it increased the risk weightage to 25 percent. Made an increase.

HDFC Bank, the country’s largest private sector bank, reported a 15.5 percent growth in its personal loan portfolio in the second quarter of FY24. Similarly, in the July-September quarter, ICICI Bank’s personal loan portfolio increased by 40 percent to Rs 1.04 lakh crore and its credit card portfolio increased by 29.5 percent to Rs 43,230 crore.

What is risk weighting?

Personal loan is an unsecured loan. It carries the highest risk because it has no collateral. The risk of drowning is highest. In such a situation, RBI asks banks to keep a buffer of extra amount with them for giving unsecured loans. RBI wants that the riskier the loan, the higher the weightage. So that banks do not affect liquidity by distributing loans openly and money depreciation does not occur.

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If you are also planning to take a personal loan or credit in the coming time, then this task can be a bit difficult. Yes, sources claim that the Reserve Bank of India (RBI) has asked banks to further tighten the background checks of customers before issuing unsecured retail loans and credit cards. In unsecured loans, nothing is pledged with the banks. This is the reason that their interest rate is higher than other loans.

Credit card and personal loan trend increased rapidly

RBI has warned the banks seeing the increasing risk of sinking of such loans. The Reserve Bank can also curb the unsecured portfolio amidst the increasing risk of default. After the Kovid epidemic, the trend of credit cards and personal loans has increased rapidly. According to statistics, in the year 2022, the number of personal loan borrowers has increased from 7.8 crore to 9.9 crore. Similarly, the number of people taking loans from credit cards also increased by 28 percent to Rs 1.7 lakh crore. Earlier it was 1.3 lakh crores.

Personal loan increased to 40 lakh crore

in the year 2023 also the speed of unsecured loan is increasing rapidly. According to the data released by RBI, as compared to February 2022, personal loans increased from 33 lakh crore to 40 lakh crore in February 2023. That is, an increase of 20.4% was seen in it. RBI believes that unsecured credit growth is a matter of concern amid inflation and rising interest rates.

This is the reason why the Reserve Bank has asked to be strict on unsecured loans in view of the possibility of a possible default. Apart from this, some changes have been made from the side of the banks. Sources say that RBI may increase the risk weight in unsecured loans.

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