The banking industry will likely require Rs 84,000 crore of excess capital — or a five per cent increase — over the Rs 15.2 lakh crore capital requirement following the Reserve Bank of India’s (RBI) decision to increase the risk weight on the exposure of banks to consumer credit, credit card receivables and non-banking finance companies (NBFCs). Experts believe this will increase the cost of borrowing for consumers.
The immediate impact of the enhanced risk weights is the excess capital now that banks would require, according to Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India. This means a 55-60 basis point increase in CRAR (capital to risk-weighted assets ratio).
Register to continue reading this story
Google
Facebook
Email
Already have an account? Sign in