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NBFCs may see NIM compression as cost of funds inch up

nbfc loans: Risk weights on AAA NBFC loans doubles to 45%

Tighter Reserve Bank of India norms mean that the bank risk weights on loans for AAA NBFCs have now more than doubled to 45% from 20% earlier, while those for AA-rated NBFCs have increased to 55% from 30% and for A- rated NBFCs to 75% from 50% earlier. Higher risk weights require banks to set aside more capital to provide cover against such loans.

RBI directive: RBI directive on unsecured loans: No big impact on banks & well-diversified NBFCs

“Our initial assessment at this point in time is, if we were to look at something like a bank or a well diversified NBFC, the overall impact on capital may not be material. We are still reworking the numbers, but initial assessment does seem to suggest that the overall impact on the current capital would not be more than 75, 80 basis points as such.”

MC Explains: RBI tightens consumer loan norms for banks and NBFCs

The central bank increased the risk weight for consumer credit, which means banks and NBFCs must set aside more capital against such loans.

Banks, NBFCs may raise rates after RBI's action on consumer loans, experts say

A jump in risk weight means lenders have to set aside higher capital against these loans. It will impact the capital adequacy ratio of banks as well as profitability.