RBI Draft Proposes New Risk Weights for Loans by Borrower Risk
Why in the news
The central bank wants capital requirements to track borrower risk, freeing capital for lending.
Key facts
- Aim: reward disciplined credit behaviour and improve capital efficiency.
- Home loans above ₹3 crore: 5% surcharge.
- Unrated corporates above ₹200 crore stay at 150%.
| Loan type | Proposed | Earlier |
|---|---|---|
| Credit cards | Transactors 75%; others 125% | 125% flat |
| Home loans | 20%-60% by LTV and loan count | 35%-50% |
| Personal loans (excl. housing, education, vehicle) | 125% | 125% |
| Corporate | 20%-150% by rating | 30%-150% |
| MSME, real estate | Dynamic, by borrower risk | Varied |
Rationale
- Attracts high-quality, low-risk customers.
- Home loans: up to two loans from 20% (LTV up to 50%) to 40% (LTV above 80%); third loan up to 60%.
Exam angle
- Term: risk weight.
- Transactor weight: 75%.
- Surcharge threshold: ₹3 crore.