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    RBI Reduces Risk-Weight on Consumer Credit Under Standardized Approach

    September 12, 2019

    RBI decided to reduce the risk-weight for consumer credit, including personal loans, but excluding credit card receivables, to 100%, under the standardized approach for credit risk management. Before this revision, consumer credit, including personal loans and credit card receivables but excluding educational loans, had a risk-weight of 125% or higher, if warranted by the external rating of the counterparty. Other stipulations remain the same. The change is applicable to all scheduled commercial banks, local area banks, small finance banks, and regional rural banks.

    Keywords: Asia Pacific, India, Banking, Risk Weight, Consumer Credit, Standardized Approach, Credit Risk, Basel III, RBI

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