Impact of new RBI lending norms on Fintech By Mr. Shivaji Thapliyal, Yes Securities
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Below the views on the impact of new RBI lending norms on Fintech By Mr. Shivaji Thapliyal, Head of Research and Lead Analyst, Yes Securities
“Based on our understanding of the RBI definition for consumer credit, we note that (1) LAP (Loan Against Property) and (2) unsecured personal loans are 2 major loan segments whose risk weights stand increased by 25% points.
The RBI seems to earmark the credit card segment for special attention, assigning the highest risk weight of 150%.
Relatively minor segments (in terms of total loan book proportion) whose risk weights also stand increased by 25% points are loan against deposits and loan against shares.
Retail loan segments that are unimpacted are housing loans, auto loans, education loans, gold loans and KCC loans.
Furthermore, as per our understanding, loans explicitly classified as MSME loans would be unimpacted even if they satisfy the RBI definition of retail loans i.e. have ticket size less than Rs 50mn. Also, microfinance loans would be largely unimpacted since most of these loans are disbursed for business purposes. However, any microfinance loan made for consumption purposes would, in our understanding, be impacted.
The aforementioned rise in risk weights for specified loan segments will (1) lead to greater capital requirement for banks depending on the quantum of the said exposures and (2) cause banks to re-assess their growth patterns in the specified loan segments with a potential to pull back growth in these segments, likely on a moderate basis.”
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