Overview

• The Reserve Bank of India (RBI) has tightened rules for personal loans and credit cards, raising the risk weights for banks and non-bank financial companies (NBFCs) by 25 percentage points to 125% on retail loans.
• State Bank of India (SBI), the country's top lender, expects minimal impact on its capital ratios from the central bank's tighter rules for personal loans.
• The higher capital requirement will make loans costlier and crimp growth, according to bankers and analysts.
• SBI has already moderated growth in the unsecured personal loans segment, maintaining about 15% growth in its retail loan portfolio this fiscal year.
• The tightening by lending partners will impact many startups, most of whom rely on NBFCs to extend loans to consumers.